Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

BUSINESS OF THE HOUSE

Mr. Gordon Walker: May I ask the Chancellor whether he has a statement to make about next week's business?

The Chancellor of the Exchequer (Mr. Harold Macmillan): Yes, Sir, I have an alteration in business to announce. Discussions have taken place through the usual channels and arrangements have been made for a debate on Cyprus to take place on Thursday, 19th July, which will be the 23rd allotted Supply day. Afterwards, we shall proceed with the Motion to approve the Import Duties (Exemptions) Order relating to pork, bacon and ham already announced. The debate on the Vote for the Ministry of Education will not now take place next week.

Mr. Keegan: Can my right hon. Friend say whether Supply will be taken formally on Thursday, and a Motion tabled, or whether the question of Cyprus will be discussed in Committee of Supply?

Mr. Gordon Walker: That is for us to say.

Mr. Macmillan: In reply to my hon. Friend the Member for Nottingham, South (Mr. Keegan), that matter has not yet been arranged through the usual channels.

Orders of the Day — FINANCE (No.2) BILL

Order for Third Reading read.

11.6 a.m.

The Financial Secretary to the Treasury (Mr. Henry Brooke): I beg to move, That the Bill be now read the Third time.
We are all nearing the tape in our Budget "marathon" and I detect that of the mass of excited supporters who were here when we started on 17th April many have gone home and left us to finish alone. But from 16 days of financial debate, my right hon. Friend's savings Budget has emerged inviolate with its structure preserved and its parts polished and perfected.

Mr. H. Hynd: Not entirely.

Mr. Brooke: My right hon. Friend has shown himself sensitive to good speeches, good suggestions and good Amendments, as, I think, hon. Members generally will recognise, and he has accepted help from both sides of the House. It has not been his policy to stand resistant like an obstinate Colossus, because he full well knows that is not the way to win marathons. I know he wishes me to say at the outset—he will speak himself later in the debate—that he appreciates the co-operation shown by the House throughout those long days.
Amendments have been taken quickly and there has been extraordinarily little waste of time. On the one occasion when we sat all night we worked very hard and completed no fewer than 23 Clauses. I remember that the hon. Member for Cheetham (Mr. H. Lever) tried deviationist tactics and started a kind of solitary filibuster, but he gained no marks at all in the Division Lobby at the end. Among those who have greatly helped in shaping and polishing the Bill I wish particularly to thank my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) and my hon. Friend the Member for Langstone (Mr. Stevens). In the course of our sittings we have amended the Bill for the benefit of Scotland and Wales and Northern Ireland. The Chancellor has listened sympathetically to the voice of Birmingham and, last but not least, to Brixton.

Mr. Hynd: But not Lancashire.

Mr. Brooke: Yes; I think it will be found that my right hon. Friend has spread his favourable sympathy throughout the British Isles.
The primary purpose of the Bill at this Third Reading, as it has always been, is to moderate the inflationary pressure. It does this by cutting investment allowances, by producing new incentives to save and by preserving and augmenting the great Budget surplus. It may be of interest to the House that in the Bill in its final form no fewer than 12 of the 44 Clauses have significance for saving. The cost to the Revenue of saving incentives is more than made good by raising the Tobacco Duty, in Clause 1, and the Profits Tax in what has now become Clause 29. Though he has proved malleable elsewhere, on these two Clauses the Chancellor has stood utterly firm. They have been carried through quite unscathed and they set the fiscal and legislative seal on his Budget statement.
We must fortify the surplus but where we can achieve this not by extra taxation but by economies in Government expenditure, that is the far far better way. We have £76 million of economies to report already this year. Do not let anyone in this House or outside think that the £29 million of Supplementary Estimates, unwelcome as they are, certainly to the Financial Secretary, upset the calculations on which the Bill is founded. It is quite reasonable to expect that over the whole year they will all be offset by underspendings in other directions.
Like every good Finance Bill, this one includes some Clauses to prevent tax avoidance, some to improve the collecting machinery—to stop holes that might tempt any revenue-nibbling rats, to make sure that the law really means what Parliament intended it to mean when first enacted, and, as it were, to tailor the tax-collecting garments—perhaps I should say the tax-collecting shrouds—to the needs and measurements of special classes of taxpayer.
I am very glad that we amended the cider Clause, Clause 2, on Wednesday, to forestall a possible injustice to some individuals. That was the place where the hon. and learned Member for Kettering (Mr. Mitchison), who had been playing

the game of cherchez la femme in the Bill, ran her down in the person of Miss Ethyl Alcohol.
I am outstandingly glad that in the car Clause, Clause 7, we found means, in the end, to exempt the "specials." I believe that the final decision on that matter has given satisfaction and pleasure to unexpectedly large numbers of enterprising and deserving people. I confess that I had not realised how extensive an occupation this is, and my heart was wrung when I heard of a man who had been making his own car for seven years and, within three months of getting it on the road, suddenly feared that he might have to pay Purchase Tax on it.
We have made some useful progress with the carrying on to the Statute Book of recommendations of the Royal Commission on the Taxation of Profits and Income in original or in modified form. Let the House realise that there are plenty of others among those recommendations waiting its attention in the years ahead, but in Clauses 10 and 11, for instance, we have made a useful start, and I feel quite sure, despite criticism from some quarters, despite the Division, that it was right, in the end, to restore the position for foreigners working in this country and to keep them on the remittance basis of payment lest grave harm should befall our national economy and our balance of payments by driving such people away to the Continent or to their homes.
I grant that that is a case where fiscal tidiness was outweighed by practical results, but as a House of Commons let us be prepared to be thus receptive to ideas and free to carry them out, and not imagine that we can base our tax system wholly on paper schemes.
Those parts of the Bill which have occupied most of our time and have, perhaps, more than any others, broken fresh ground, are those concerned with the Millard Tucker proposals. The numbering of the Clauses has altered several times, but those now run from 22 to 26. Six or seven years ago a lecturer who was speaking to students on insurance topics said that in working on insurance there were two factors to which one had to give special attention—death and taxation. He added, "The thing about death is that it never gets any worse".
Since then there has been a change of Government, and, on this occasion, in the insurance field we have made sure that taxation gets better. We have carried out an act of justice and I believe that there are large numbers of people who will be grateful to my hon. Friend and to Parliament that they have removed the injustice which hitherto impeded their ability to make provision for their old age.
There has been party controversy over the decision of the Government to raise the £500 limit to £750, but there has been no controversy over our introducing a provision to cover the case of what I may call the two-job man who was not fairly treated in the Bill as it was originally presented. There has been no criticism, as far as I am aware, of the decision of the House to introduce provision for what we call the late entrants.
The House may care to have the final figures of the revised cost of the Millard Tucker proposals as here to be enacted. The Amendments which we have made to the rest of the Bill make very little change in the total Budget figures, but the Amendments that we have introduced in Part III will raise the cost from the originally announced figure of £7 million this year to £8¾ million, and in a full year from the first estimate of between £30 million and £50 million the cost will rise to between £38 million and £64 million.
The House will appreciate by now, because I have frequently warned of this, that those must be very wide estimates because nobody can tell, until this scheme gets started, to what extent people will take advantage of it.

Mr. J. T. Price: In the revised estimate with an upper ceiling of £64 million, has the Treasury taken into account any possible impact of this development on the collection of Estate Duty?

Mr. Brooke: All these estimates have to be subject to a wide margin of error, but I assure the hon. Gentleman that the Treasury, when it makes an estimate of this kind, is accustomed to taking everything into consideration and not excluding any aspects of the matter which might cause it to lose money elsewhere.
Whether the minimum or the maximum estimate turns out to be correct, these are

large sums; but let us all remember that this tax relief can be gained only if people tie up in annuity policies for their old age money which otherwise they might well spend here and now. It is, as it were, bait to help catch the tiger—the tiger of inflation which has been threatening to gnaw our standard of living and to devour our export trade.
I never claimed that we would get Part III perfect at first shot. I shall not be in the least surprised if, next year or the year after, we have to spend some hours again on what will by then be Part III of the 1956 Finance (No. 2) Act. In Committee, however, we have vastly improved Part III and I am very grateful to all those hon. Members with special knowledge of these technical subjects who have helped our debates.
The Bill is eight Clauses longer than when I moved its Second Reading, two months ago. Logically, perhaps, my speech on Third Reading should be proportionately extended, but in Clause 10 we put expediency above logic and, with the permission of the House, I shall do the same now. No doubt I shall be told that I am leaving yawning gaps. Better that on a Friday morning than to see gaping yawns.
My hon. Friend the Economic Secretary and I have been over this course before, and so have the right hon. Member for Battersea, North (Mr. Jay) and the right hon. Member for Huyton (Mr. H. Wilson). My right hon. Friend the Chancellor this year came fresh to the financial marathon. We had a new first string for the Treasury team, so to speak, and yet I wonder whether in any previous Finance Bill the House has ever come together in simple unity as it did two days ago on the Victoria Cross, or on the fifteenth day of testing financial debates has ever heard from any Chancellor a more moving speech straight from his heart and from his memories.
We rightly have our disputes over £ s. d. and economics and all that, and so, year by year, our Finance Bills are shaped. This Finance Bill, however, to which I ask the House to give a Third Reading today, enshrines also within it the half hour when Parliament paused of its own accord for a gesture of honour to the holders of the Victoria Cross in their centenary, and in this summer month which brings round the fortieth


anniversary of the most humanly terrible of all British battles, the battle of the Somme. It is but a small thing we can do for the bravest of the brave, but we do it as a symbol of thankfulness to them and to all their fallen friends and ours.

11.23 a.m.

Mr. Gordon Walker: The Financial Secretary to the Treasury rightly said that we have had a very good-tempered debate through all these long days and nights that we have been dealing with the Finance Bill, but he will agree, I am sure, that the House and the Committee owed a great deal to this side of the House and its co-operative and proper responsible attitude, which contrasted somewhat with the co-operation we used to receive in some Finance Bills for which we were responsible. The only all-night sitting was due primarily to Amendments coming from the right hon. Gentleman's own hon. Friends, and not from anything that we on this side were doing. Although I am not as versed in this as I might be, I think that, on the whole, an unwonted amount of time was taken by the other side of the Committee during the Committee stage of the Bill.
The right hon. Gentleman was in fine form today. I congratulate him on his verbal felicities and on the tone with which he ended his speech. He was, as always, very courteous. Indeed, through this long marathon, as he has described it, he has been unfailingly courteous. His courtesy has been painstaking and sometimes exhaustive, and we are grateful to him for it.
The right hon. Gentleman has had a good deal of killing to do in this Finance Bill. The Chancellor has cast him in the rôle of first murderer to his own Macbeth, and the right hon. Gentleman clearly decided that the right way to kill was to kill by kindness whenever he could, which is a process that takes a certain amount of time. We are, however, grateful to the right hon. Gentleman for the way he has borne himself through these debates. He has developed an endearing habit, when telling us the cost of Amendments which we have put forward, of doing it with the discretion of a well-trained head waiter when presenting a bill, implying in his bearing that

it is so inflated that he does not expect a tip as well.
The right hon. Gentleman has inverted his last year's rôle. Then, he was a great killer of yawning gaps. In this Bill, he has been a great defender of such gaps as between amateur and professional sport after cricket has been admitted into the category of amateur sport. Nevertheless, he has done it with great good will and with great care and attention.
The Economic Secretary, the second murderer in this play which we have been going through, has shown his usual charming and indefatigable buoyancy the whole time. His killing has been done by intellectual argument which both he, which is a nice thing, and we have enjoyed all the way through. In the course of the debates, he has produced a second Boyle's law, which I think is more important and more valid than his first, which he has equally sold to his right hon. Friend the Chancellor as he sold his first Boyle's law to the Chancellor's predecessor.
This latest Boyle's law is that there has been a change in the nature of consumer demand and that the great increase in the demand for consumer durables means that consumer demand now competes directly for materials and supplies with exports and capital to a degree and in a way that they never did before. There is a good deal in that, but as argued by the hon. Gentleman it has a rather gloomy corollary, for it means that this is a permanent state of affairs, or a very long-lasting state of affairs.
If the Government are not prepared to use more controls to cope with this problem, the corollary follows that we will never be able to let up with the present Government's policy, for if we rely only on the Bank Rate and on unselective restrictions to keep down this consumer demand, the moment that we begin to relax that policy, Boyle's second law will come into operation; consumer demand will rise and will compete for the same sources of materials with exports and capital, and we will have to start all over again with a high Bank Rate and unselective restriction. I do not know how the hon. Gentleman escapes from that corollary of his own law.

The Economic Secretary to the Treasury (Sir Edward Boyle): I hope the right hon. Gentleman will not forget the third Boyle's law; that is, that we have not been relying wholly on the Bank Rate or unselective restrictions.

Mr. Gordon Walker: To a disproportionate degree. I am coming to this new rôle of planner in which the Chancellor and the hon. Gentleman have been appearing.
The Chancellor, whom we are glad and grateful to see in his place on a Friday to wind up the debate, has, as his right hon. Friend the Financial Secretary said, suddenly appeared halfway through our debates in a new rôle—that of the great planner. He has suddenly said that he is a great believer in discriminatory planning, much to the alarm of some of his hon. Friends like the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), whereas, of course, a short while ago he was saying that there must be nothing but monetary policy and that we must have the classical controls and all the rest.
The Chancellor's hon. Friends below the Gangway, however, need not really be disturbed, because this is a change simply in word and not in deed. The Chancellor has decided to dress exactly the same policy in opposite terms. His policy has not changed. It is still predominantly and primarily monetary and unselective. It is a general depressive control that he is in the main using, and he has not changed his policy in this respect. He has changed only the words by which he chooses to describe it. It is, perhaps, significant that the Chancellor has found it better to describe the same Conservative and doctrinaire policy in terms of planning rather than in terms of anti-planning.
Different views have been expressed about the performance of the Chancellor during our debates. Some have spoken for it and some against it. Some have praised him very highly indeed, but none has spoken so highly of the Chancellor as the Chancellor himself. If we look through our debates, we find them peppered with eloquent and striking self-tributes.
Seriously, however, we realise that a Finance Bill is a grave strain upon Treasury Ministers. It involves them in a very gruelling time. They have served

the House very well. I do not mean that they have served us well by their arguments because, of course, we have not been convinced by them, but rather by their attention and the care and trouble they have taken to understand and deal with all the points that we put forward. It none the less remains a very poor Finance Bill.
The Bill has been slightly improved by my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). I suppose it may be a unique achievement to get two new Clauses into a Finance Bill. Those Clauses must have been well drafted in the first place, for not even the Treasury draftsmen with their pernickety feeling for accuracy, and, I think, a certain professional pride in putting their words in place of the words of others, could find anything wrong with them. I did detect the hand of my hon. and learned Friend the Member for Kettering (Mr. Mitchison) in the first of those Clauses. I wish to say how much we owe to his tremendous skill and the trouble he has taken to help us in this Finance Bill.
However, despite the improvements made by my hon. and gallant Friend the Member for Brixton, he would be the first, I am sure, to agree that this remains a very undistinguished Bill. It might well be called the "Small Bottles and Big Lottery Bill." There is no enthusiasm among hon. Members opposite for it. As the right hon. Gentleman said, most of his hon. Friends have gone home already. I do not know if there will be enough of them here to keep a House. The Bill is hardly worth voting for from their point of view, and certainly not worth voting against from our point of view. It is a very miserable Bill, and we do not propose to divide against it.
As the right hon. Gentleman said, it is eight Clauses longer, but it is no better and in some ways, rather worse than when it first came to us in Committee. The main change, for which I suppose the right hon. and learned Member for Kensington, South (Sir P. Spens) was responsible, is in Clause 21, which raises the limit of tax-free premiums from £500 to £750 a year. The right hon. Gentleman the Financial Secretary was right when he said that there has not been controversy over the broad proposals of the Millard Tucker Committee. After a


great deal of careful thought, we came to the conclusion that, on balance, they were right and would remedy an injustice, but let there be no mistake, we are very strongly and bitterly against this method of raising the limit. It is not merely that we do not like making a gift of £1½ million to very rich men. Nor is it an argument between ourselves and the Chancellor on an arbitrarily fixed figure. There is more in this, and I would ask the right hon. Gentleman to understand that why we are against it and so firmly against it is that the £5,000 limit in the original Bill was important in itself. That is the real reason.
That became clear in the comments of the dissenting note to the Millard Tucker proposals, and the minority report of the Royal Commission, which showed certain inherent defects in terms of justice and equity in the whole of the Millard Tucker proposals. They wanted a limiting level at which these things could be enjoyed in order to reduce those defects. The Millard Tucker Committee admitted the justice of that in paragraph 392 of its Report. The Committee drew the line at £5,000 and said that over that the permissible percentage should drop below 10 per cent.
I agree that we are going a little further than the Millard Tucker proposals, but everyone, including the Millard Tucker Committee in its Report, felt that £5,000 is a natural and proper limit to check certain defects that arise out of this approach to the problem of pensions. Clause 21 in its present form ignores that principle of the Millard Tucker Report itself. It is more generous and flouts the Millard Tucker proposals, which were already extremely generous—too generous in our view—to self-employed people, controlling directors and the rest.
We were always doubtful about the proposals, but on balance came down in favour because the £5,000 limit, looking at what all the experts had said, reconciled us to the defects because, with the £5,000 limit, they would not be too great. We are against this provision of the Bill, whatever representations are made anywhere. It means that with this Clause the Bill contains something which is not accepted by both sides of the House and about which we must reserve our rights.
The Chancellor has rightly said that the whole of Part III is an experiment which will need adapting and adjusting. We accept that and will play our part in adapting it as we can, although we retain our objection to this one point. The cost remains very wide, now between £38 million and £64 million a year in a full year, as the right hon. Gentleman told us. I wish to ask the Chancellor if he could see to it that the records are kept in such a way as to show the exact cost of the Millard Tucker proposals. That is the only way in which we can proceed jointly from both sides to help and to adapt them. I also ask if records can be kept in such a way that the cost of raising the limit from £500 to £750 is clearly shown. Those are two things which I think are proper and right to ask, because broadly we are co-operating on the matter. We want to adopt and make permanent in our financial system this new principle by which self-employed people will be able to secure pensions.
The general inadequacy of the Bill is shown, amongst other things, in Clauses 27 and 28, the anti-avoidance, or Helex and Universal Grinding Wheel Clauses. Those are good proposals, and we are glad to see any loopholes for tax avoidance stopped, but, good as they are, they are really very piffling when set against the immense, massive, wave of tax avoidance, of which now there is more and more evidence. It would be wrong for me to elaborate that now, but there is so much evidence of tax avoidance that it should be the first duty of an active and effective Government to stop up those gaps much more than is done in these relatively unimportant Clauses.

Mr. H. Brooke: For the record, those Clauses are now numbered 30 and 31.

Mr. Gordon Walker: I am grateful to the right hon. Gentleman. This error must have slipped into my notes very late last night.
We are told that this has been a savings Budget, and of course we will support and do what we can to encourage savings. It is obviously very important for the economic needs of the nation that saving should be increased, but I must repeat that there are some doubtful and even dangerous expedients in the savings


proposals of this Finance Bill. One is the tax relief on the first £15 in the Post Office Savings Bank, which I believe is in Clause 9, although that may now be renumbered. That, unquestionably, is going to do considerable harm to the Co-operative movement and certain municipal savings banks. The Co-operative movement and the C.W.S. Bank derive a great deal of capital from the dividends which individual co-operators leave in their local stores. That is a well established way of saving which has served the country well and produces true savings. There will now be a very big switch of those funds in order to get the benefit of the £15 tax-free allowance. Something like £600 will be moveable from Co-op deposits to the Post Office to get the benefit.
This really is discrimination—not in intention, I think, but in effect—against the Co-operative movement. The Government deployed the argument in the course of our debates that the reason they are making the distinction is that they want to favour institutions which leave the money with the Government. That is what the Post Office Savings Bank and trustee savings banks do. But that was an afterthought. I do not think it was produced by the Chancellor in his original Budget statement. It is an irrelevant argument. The national need for increased savings in the economists' sense of the word, is increased savings to balance increased investment, and it does not matter, from the national interest, in what form those savings are so long as they are genuine savings. Co-operative savings are just as good as those in the Post Office Savings Bank as a real contribution to meet inflation.
If the Chancellor really means to favour only those institutions and methods of saving that leave the money with the Government, he has not gone far enough with his Millard Tucker proposals. Why does he leave money with private insurance companies? If he is so determined to benefit only those savings institutions that leave the money with the Government, he should have been logical and have set up a State insurance company in order to carry out Part III of the Bill, because then the money would also have been available to the Government.
As it is, under Part III, these insurance companies will save in a genuine way

just as the Co-op saves in a genuine way, but he refuses to give the Co-operative movement a concession that would soften this blow, whereas he is not worried at all about the argument of leaving money with the Government when dealing with the insurance companies. That being so, he really should use the argument logically and either abandon it in the one case or apply it throughout. This will be a serious blow to the Co-operative movement, and it will be widely remembered by that movement and by its members.
The other thing that is disturbing from our point of view is, of course, the lottery bonds. Here the Chancellor had great fun setting up Aunt Sallies which he knocked down with elegance, but those Aunt Sallies have not been arguments produced from this side. My right hon. Friend the Member for Huyton (Mr. H. Wilson), speaking for the party, never based his case on an absolute moral objection. He was most careful from the beginning not to do so. What he did base his objection on was the idea of the State, with all its dignity, entering into this field of lottery.
That is a very widely-felt objection on this side. The Chancellor used the argument, and will no doubt use it again, that if we tax football pools, what is the objection to going into the lottery business? But that argument takes him quite a long way on. He taxes betting. On the argument that if we tax football pools we can go into the lottery business then, if he taxes betting, the State should go into the "bookie" business—and the Government have in the Postmaster-General someone very well equipped for the rôle. However, I do not think that the Chancellor would say it was right for the State to enter into direct competition with the "bookies" just because we tax betting. If that is so, then, by the same argument, he cannot say that because we tax football pools the State should indulge in a lottery.
I have an idea—and I hope that the Chancellor will listen to this point, because I want to ask him two questions about it—that this lottery bond will be very expensive. My first question is; what is the real cost of it per £100, or calculated in some such way, so that we can get some idea of the effective interest rate that the State will be paying out in


order to draw these savings in? As I see it, he has to take into account three factors. The first is very easy—it is the 4 per cent. which he told us is to go wholly to prizes and no part of which will be eaten up with costs.
The second factor, therefore, is the cost. In Committee, he told us that the cost would be pretty considerable. From the Supplementary Estimates of the Post Office, we now know that something like £1,090,000 extra is being spent on the mere cost of administering these lottery bonds. Presumably, there is still more to come. There are the actual buildings to be opened, and all sorts of things to be fixed. I take it that by now the Chancellor must know what the cost is. The bonds are to start pretty soon so he must have a fairly good idea as to what the total cost will be, and I hope that he will tell us.
Thirdly, could he tell us how much tax he expects to lose by virtue of the fact that the payments on the bonds will be tax free? Of course, like all the things the Chancellor does, this will benefit the rich people more than anybody else. One would expect the large purchasers of Premium Bonds to come from the higher Surtax payers, because, of course, they will stand to gain more if they win than will those paying lower rates—the prizes being tax free.
I do not know whether the right hon. Gentleman can himself work out the answer to my second question, but I have no doubt that he has resources at hand to enable it to be done. Assume that a top Surtax payer buys these bonds and goes on buying them year after year and does, over the years, get an average 4 per cent. on them. That is what the average return will be if he goes on long enough. It will be something like 4 per cent. What is the true rate of interest if a top Surtax payer gets 4 per cent.? The Chancellor worked out for us during the Committee stage what the true rate of interest would be to a top Surtax payer if the £15 Savings Bank free-of-interest concession was extended to him. I think it worked out at about 33⅓ per cent. The same true interest figure must, therefore, be calculable in this case. If a top Surtax payer wins, what would he have to get, in fact, to earn 4 per cent. tax free?
We are, of course, in favour of the new securities, of which the Chancellor has spoken, and we will do our best in every way we can to make them prosper. At the same time, they make incomprehensible the decision which, I understand, has been taken to make a cut of 5 per cent. in the staff of the National Savings Committee. To launch new securities, which will need a lot of drive and energy and, at the same time, to cut the staff from 657 to 613 seems to me to be so contradictory and incomprehensible an act that I hope that the Chancellor will find some means of defending it.
I am told that the staff association, which is the Staff Side of the Whitley Council, was not consulted or informed about this decision to cut the staff, and has put it on record that the cut will impede the promotion and sale of new securities. I understand that the Financial Secretary refused to receive a deputation from the staff assocation. I do not know how these two positions can be reconciled—the Chancellor telling us that it is a savings Budget, that he is putting everything in, and yet reducing the very staff whose work is necessary to promote the new securities.
The Financial Secretary told us that the extra Supplementary Estimates did not at all destroy the basis on which the whole Budget was based, which includes a cut of £100 million, but it really seems to me that the basis of the £100 million cut is being pretty rapidly destroyed. First, the Chancellor announces cuts amounting to £76 million, but £20 million was announced before ever he announced the £100 million cuts. The cuts of £20 million were already decided upon and cannot really be included in the £100 million. We now have Supplementary Estimates of £29 million, and I think that next February, as a result of extra pay in the Civil Service, we will have further Supplementary Estimates of about £12 million. The three together amount to £61 million which, taken from £76 million leaves £15 million, and that, I imagine, will be swallowed up in the extra support costs which we will have to meet in Germany. As far as I can see, the £76 million has disappeared within a few days of the Chancellor's announcement, and I hope that he will tell us how much of that sum now stands and is real.
The gravest aspect of the Bill is in Clause 15, that providing for the suspension of investment allowances. This is typical of the Government's unselective depression of the whole of our economy, regardless of what is good or bad. It is typical of the Government's whole approach to the country's economy. The Economic Secretary, with his irrepressible optimism, has been telling us that capital investment is doing fine and has communicated his enthusiasm to the Chancellor, who read the "indicators" of the economy like someone reading the augurs for us.
I should like to ask the Chancellor this. If investment is going up in this very satisfactory way, how much of the figure of increased investment is due to investment in the overswollen motor car industry, much of which investment may be wasted because the industry may not be able to use the capacity? How much of the statistical investment is due to industry buying private motor cars, which is reckoned as investment in our statistics? And even if the figures for 1956 look good, what about 1957 and the immediate future? The Chancellor will no doubt have read the leading article in the Financial Times of 5th July. It made comments on his reading of the economic evidence, which are somewhat disturbing. It is headed "Fewer Factories". It says:
With approvals for new industrial building in the second quarter of the year down to half the 1955 level … Last quarter's results"—
for new starts of industrial building—
were, in fact, the lowest for two years. The quarter was the first in which the full effect of the suspension of the investment allowance has been felt.
It goes on to say:
To the extent that the effects of this cutback in investment will not be felt in 1956, the Chancellor is right in assuming, as he did in Tuesday's debate"—
that is the debate to which I have been referring—
that the present level of investment remains strong. But"—
and I hope the Chancellor will answer this—
otherwise he may have under-estimated the effect of his measures which are now clearly working in this sector of the economy.
In other words, in 1957 the drop of investment will begin to be very grave,

although there may be temporarily good signs for 1956. I hope that if the Chancellor reads the augurs for us again, he will carry them through perhaps to 1957.
This, of course, would be extremely serious. If capital investment in factories begins to drop, the lifeblood of the country will begin to be restricted. Here we are within the usual dilemma which the Government are in when they have no proper physical and other selective controls. We either have a drop in factory building, or we have a let-up, and Boyle's second law comes into operation, and consumer demand immediately begins to compete with export and capital investment. We are really now in this dilemma which, according to the Financial Times and anyone who approaches this problem intelligently, is leading us steadily towards a decrease in our future capital equipment in the country.
The Finance Bill is, for this reason, for this Clause and for other Clauses in it, an integral part of the policy that is leading to the depletion of the capital equipment of the nation. It is not only a dull Bill and an inadequate Bill that is not firing the enthusiasm of the Government's own supporters at all. In some respects it is a frivolous Bill, and it is quite unapt to the real and critical economic needs of the nation.

11.52 a.m.

Sir Patrick Spens: I have listened to the speech of the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) with a certain amount of satisfaction and also with a certain amount of other feeling. Various old clichés come into my mind, about people barking and not biting, about being brave enough to strike but not brave enough to kill, and when the right hon. Gentleman announced that he and his hon. Friends, despite all that he has said about this Bill and about the policy that is incorporated in it, have no intention of dividing against it, I decided to pass to other things and treat the matter from a very different point of view. I want to start by thanking my right hon. Friend the Chancellor of the Exchequer and the other Treasury Ministers who have worked with him for the many concessions that they have made to criticisms which came from my right hon. Friends and myself. It is true that there was a


larger number of Amendments from the Government side of the House than from the Opposition, although, of course, there was a large number of new Clauses put forward by the Opposition. But the Amendments which have been accepted by my right hon. Friend are very much appreciated by all of us who have been working on this Bill.
In a sense, it may be a dull Finance Bill, but it is a Finance Bill of immense value to a great number of people in this country, both immediately and in the future. The two chief items which are helped by the Bill are the savings provisions embodying many of the suggestions of Sir James Millard Tucker and the proposals to enable the Premium Bonds to operate.
I personally hope very much that the estimate that in a full year the Millard Tucker proposals may cost as much as £64 million will be realised very soon, because it will mean that the self-employed and the professional persons, both those who are entitled to come in on the basic plan and late entrants, are taking full advantage of what I believe to be a great opportunity for professional people, small shopkeepers, self-employed people and employees without a pension fund of their own. There are millions of these people in the country, and if they all realise what advantages these schemes will be for their old age I hope that my right hon. Friend will get his savings, even though he may lose £64 million of income.
I also want especially to thank my right hon. Friend for the way in which he has implemented a somewhat casual suggestion thrown out by me at an early stage, namely, the hope that the Premium Bonds system would be in operation by Christmas so that it would enable full advantage to be taken of it by people in the way of Christmas presents for themselves and for others. I hope also that that will go right through the country and that full advantage will be taken of it.
If one looks at the Bill, at first sight, one might form the conclusion that there are not a great number of direct reliefs from taxation for the less well-off sections of the population. There is one which has been criticised by the right hon. Member for Smethwick, namely, Clause 9,

which gives relief on the £15 of interest from savings banks which, by amendment, has been enlarged and which, quite frankly, I hope will, in the years to come, be enlarged still further. It is a direct relief for an old married couple to the extent of £30 of their income if it is in one of the savings banks—something which will be much appreciated in many quarters. But, of course, I look forward to the time when I hope that we shall be able to relieve elderly couples of Income Tax in an even more generous way than that.

Mr. F. Beswick: Is the right hon. and learned Gentleman saying that it is a bad thing to discriminate today between one category of small savers and another?

Sir P. Spens: I fully appreciate the hon. Gentleman's point. There is something to be said at the moment for exercising discrimination on the basis that it is money retained by the Government or spent under directions of the Government. I hope that in years to come it will not matter where the savings are, and that there will be a complete relief, at any rate, for old people up to a certain amount, wherever the savings are, but at this time there is a basic difference between savings which are retained by the Government and savings which are elsewhere.
People have not realised how many additional reliefs there are in the Bill for various and varying classes of people. None of them amounts to a very great deal, but between them they cover a great number of people and all remove complaints about taxation which seems to be unjust and to be hitting people very hard.
I have jotted down the Clauses which I have particularly in mind. First, there is Clause 11 in the last and proper print of the Bill, which I hope we all have, relating to relief from a great injustice to persons working abroad. Clause 12 gives relief from an injustice in regard to remittances from overseas income. Clause 13 gives relief to all of us—not a very great one, but one that has been generally required, and it is there. Clause 19 and Clauses 32, 33, 34 and 36 all deal with occasions and cases where death duties have felt to have been grossly unfair in their incidence.
Finally, but not least, there is both a reduction of the Stamp Duty on conveyances and sales and one final Clause in which I have a very personal interest, namely, the relief from taxation of the pensions paid to Indian, Pakistan and Burmese retired civil servants who are not resident in this country. This is not a great thing, but it removes what was felt to be a grave injustice by those who were unable, or did not wish, to come to live in this country. Therefore, all told, anyone who takes the trouble to go through the Finance Bill will find that a great number of people will benefit from it in various ways.
Of course, one thing remains, and the part of the Bill that I certainly hope to see radically changed next year contains the words "eight shillings and sixpence", in Clause 8—the standard rate of Income Tax. If the Budget is successful and if the outcome of this Finance Bill and the other Measures are successful, I look forward to the day when my right hon. Friend will be able to make the most important Amendment of all, namely, that of reducing the standard rate of Income Tax. I am optimistic by nature, and although I know that there are all the difficulties referred to by the right hon. Gentleman, I look forward, and I hope that I shall be here, to the time when the standard rate of Income Tax is once more reduced by a Conservative Government.

12.3 p.m.

Mr. J. Grimond: The pith of the speech of the right hon. and learned Member for Kensington, South (Sir P. Spens) was, I think, in his closing sentence. We shall all welcome the day when the standard rate of Income Tax is reduced. I want to touch on one or two of the things about which he spoke a little later on.
I have taken part in many of the laps in this marathon, and I am glad to be present to hear what the Financial Secretary had to say when he finally crossed the tape. I should like to add my respectful congratulations to him on the serenity with which he and his colleagues have conducted this Bill, which has only been matched by the positive affability of the Opposition.
But, after all, although we conduct this Third Reading rather like an annual prize

giving day, the question really is not what prizes we are giving ourselves but what prizes the public is prepared to give us.
My feeling is that the public has not felt that this Budget gives any incentive to more productivity. This is fundamentally what the country needs, and that, I am afraid, is a major criticism of this Bill. It may be said that the implementation of the Millard Tucker proposals will give some incentive, but, apart from that there is none. I hope that the Chancellor, next year at any rate, will attend to the fundamental question of bringing some dynamism into our economy.
I also feel that this Finance Bill has had a certain lack of impact. Apart from the Premium Bonds, which are not the most important part of the Bill, and apart from the Millard Tucker proposals which have naturally been of great interest to the professional classes—and rightly so—and for which I think the right hon. and learned Gentleman deserves the thanks of all, as well as the Government, for his campaign, I do not think that the public now pretend to follow our finances.
I think that in these democratic days that is a very serious matter. I do not myself very much like the idea of more information services, but I feel that in the case of sheer economic facts and figures the Government have to set about finding some means of bringing these home in a more striking and homely manner to the ordinary man in the street.
The Chancellor in his Bill and in the Budget debate has made a great deal about the need to reduce Government expenditure. I think that we all agree that, in the end, a pretty small mouse has come out of the mountain. Although we in this House, and the people in the country also, pay lip-service to the need for a reduction in Government expenditure, we constantly ask for more Government expenditure. The traditional rôles today are reversed. The Government are the watchdog of the Exchequer and Members of Parliament are the foxes who try to get past him. In relation to this, one small matter on public relations and technique which I would suggest is that, instead of these vague phrases that the Chancellor is


going to do something and provide a subsidy of so many millions, or give a grant of so many millions, the language should be that the taxpayers are going to do this; the taxpayers are going to provide the money for whatever it may be. I believe that that in itself would do something to bring home to the country the great danger and complexity of our present economic position and the fact that the taxpayers find all this money.
That brings me to a point about which we have had many discussions—the question of tax evasion. I think that a good deal of tax evasion is because people today do not understand what taxes they ought to pay. I do not myself, and I am sure that many other Members in this House find it extremely difficult to know what they have to pay. I do not think that tax evasion is a major economic problem of this country. But there is no doubt that there must be a great deal of tax evasion, but I think that we have honestly to say that, although its most offensive form is in the higher reaches of expenditure, it goes through all classes of the community—the small farmer or the wage earner who works after hours: they do not pay tax if they can avoid it.
The truth of the matter is that today it has become less and less disreputable not to pay tax, and this is a serious matter. We have to reduce taxes and simplify the tax system and make it one which people can understand and to which they give positive assent. Until that is done, we shall never stop tax evasion.
I think that the time has come when a good many of these tax matters require a separate debate. That has been suggested before. An endless series of Amendments to the Finance Bill is not a very satisfactory way of reviewing the whole system of taxation. I agree with the suggestion that has been made that things like the Millard Tucker Report really justify a separate debate of at least two days, and an attempt on everyone's behalf to get these matters straight.
I do not believe that Ministers are now able to pay sufficient attention to the most important matters that face them. The Financial Secretary is given credit, and rightly so, for the great care which he has taken throughout these Finance Bills. He

comes along during the Committee stage and says that he had given very careful consideration to things like whether slippers with rabbit fur on them should or should not bear Purchase Tax at a certain rate. I think that is a most terrible condemnation of the whole shooting match. The Financial Secretary is an important Minister who should not have to spend hours and hours deciding whether hockey sticks should or should not bear tax, or whether cricket should he taxed and not football, and so on. It gets worse every year. It is time that the whole thing was simplified and that the Chancellor and his assistants got down to the very urgent and important matter of improving the international trade balances of this country.
The main emphasis of the Budget has been on savings. That I personally approve of, and I think the whole House approves of. I do not quite agree here with something which was hinted at by the right hon. and learned Gentleman. I believe that the distinction today should not be, as he rather suggested, between savings which are taken by the Government and those that are not, but between savings that go into risk investment and those that do not. I think that far too much of our meagre savings are not going to equip our industries, which is so necessary to enable our people to earn a higher standard of living and to keep up their position in a competitive world.
The Financial Secretary will be aware that suggestions have been made for broadening the National Savings movement and allowing it, for instance, to offer selected equity shares. This suggestion needs examination. It has been put forward by responsible people of all political parties, including, I think, a very eminent Labour economist. We have now come to the stage when we must put the emphasis not only upon savings, which are, I agree, fundamental, but upon savings which will go into risk investment, productive investment, at home and abroad.
I hope we shall be given from time to time adequate statistics about how the savings drive is going. Some of us have doubts about how the various new measures in the Bill will work, how far they will call out new savings or merely lead to a change-over from one form of saving to another. We must have


statistics to show whether the Government are really getting new savings, or whether such things as Premium Bonds mean merely that people are transferring their money from one form of saving to the other.
I cannot feel that we should be in the least complacent about this Finance Bill. It was right to emphasise savings, but I think it was very late in the day to begin doing it. Now there is a crying need for more incentives and for more productivity. I believe also that it is time we had a thorough overhaul of the Treasury, of our methods of conducting our financial and economic business in this House, and of our whole tax system.

12.11 p.m.

Mr. William Yates: I am very glad to be able to follow the hon. Member for Orkney and Shetland (Mr. Grimond), and to underline some of the points which he has already mentioned.
There are certain hard, economic facts in our country's life now which someone in this House must get up and state. There is no doubt about it that both in the past and in the present, during the last Administration and in ours, these hard, economic facts have been overlooked, or, if not overlooked, at least written off. I do not intend to lower the tone of the debate or provoke either hon. Gentlemen opposite or the Front Bench on this side of the House.
A London stockbroker, I think it was, quite rightly, remarked, "I do not see how inflation will end unless at some particular stage wages find a level and dividends likewise find a level." To put up the Bank Rate to 20 per cent., he added, would be an admission that our present fiscal policy may not, in the end, be successful.
Neither party has been able to face this problem. Hon. Gentlemen opposite, in their day, congratulated themselves that they represented the worker by hand and foot, it was "fair shares for all" for them, and often a "tinker's cuss" for the rest of society. This problem was never properly faced in their day, and they know perfectly well that they were unable to tackle it during the whole period of their Administration.

Mr. Speaker: The hon. Member will allow me to remind him that this is the

Third Reading of the Finance Bill, and that these general observations upon economics, although very interesting to the House, are really not included in the terms of the Bill. In Third Reading, we must stick to the Clauses of the Bill and the matters with which they deal.

Mr. Yates: I am grateful to you, Mr. Speaker, for your reminder. I regret that at this particular juncture I cannot follow the line of approach that I was adopting. I shall, naturally, confine myself to the effect of the Bill on the country's present economy. This gives a most unwelcome advantage, so far as I am concerned, to the Opposition.
The whole point of the Finance Bill, as I see it, is whether or not it will, in the long run, help those who are engaged in the export market. I took some trouble, therefore, to find out what the general situation is in the export market as a result of the Bill, and whether our present financial measures will help. Unless the Government are able to find time to consider the export market entirely on its own in relation to the country's economy, I do not see how the internal measures that they have taken for our own country's internal economy can be of very much advantage to the nation.
We deal in business in this country, yet we are absolutely at the mercy of foreign Governments to grant import licences for various goods and commodities. I think that the House would like to know what the financial effect is on our exporters. I have obtained a letter from a representative in the South American market. He is a buyer abroad, anxious to purchase British goods, the exporting of which is so necessary for our country's balance of payments.
According to his letter, the buyer is frustrated like the rest, but anxious to place big orders. He cannot get import licences, and he asks that the British Government should take the matter up. The general effect is that many of our exporters are very anxious about the Government's attitude as a whole towards obtaining financial advantages by diplomacy—

Mr. Speaker: Order. There is no reference to these matters in this Bill. The hon. Member should look at the Bill and the Clauses which are in it, and


build his argument around them. There is nothing at all about import licences for foreign countries in the Bill.

Mr. Yates: I am again grateful to you, Mr. Speaker. It is obvious that, since the Third Reading of the Bill does not allow me an opportunity to express my very grave concern about Her Majesty's Government's policy towards our exporters, and also about the enormous penetration of Russian business activity into the Middle East and elsewhere, I must beg leave to raise the matter on another occasion.

12.18 p.m.

Mr. F. Beswick: I do not wish to incur your disfavour, Mr. Speaker, and I shall not, therefore, attempt to follow the hon. Gentleman the Member for The Wrekin (Mr. W. Yates).
I must say that I agreed with the hon. Member for Orkney and Shetland (Mr. Grimond), who represents the Liberal Party, when he deprecated any complacency either about the Bill or about our economic situation. I did, however, feel that he was being a little complacent himself—though I do not think he intended to be—about tax evasion in this country. He seemed to suggest that because tax evasion is now widespread we should not be unduly alarmed about it.
It would be a very bad thing for this country if it should ever go out from this House that we were at all inclined to become lenient towards, or to laugh off, tax evasion or tax avoidance. It seems to me that in this matter, at any rate, we have always been, in comparison with most other countries, more strict and more honourable, though probably not voluntarily honourable. The practices which one sees elsewhere have not been tolerated here. It would be a bad thing if we appeared to treat as a somewhat less heinous crime the evasion of one's proper contribution to the State.
Having said that, I want to take up something that the right hon. and learned Member for Kensington, South (Sir P. Spens) said about the rate of Income Tax. Today, it is a very profitable business on the part of a limited number of people to advise others how easily to evade their tax obligations. The profitability of that profession arises from the high level of taxation.
In present circumstances it would be wrong to shed too many tears about the present rate of taxation. During the Committee stage, somebody said that a person enjoying an income of £3,000 a year in 1938 would today require an income of £34,600 a year to have the same purchasing power. But we all must know that there are many people now enjoying a purchasing power equivalent to an income of £3,000 a year in 1938 who do not receive anything like an income of £34,600 a year today. It is made possible, of course, by the advices which they get on this matter and by the system of expenses which exists throughout the greater part of industry. I agree, however, with the right hon. and learned Gentleman that it would be a good thing if, by reducing taxation, we could cut out this profession of tax evasion which has grown up.
I will not develop that theme because I do not wish to go out of order, but it would be a good thing to remember an original Latin expression, which no doubt the Economic Secretary could quote precisely, but which being translated means roughly, "Better to seek the source than to follow the stream". I would like to get a much higher proportion of our revenue from the source of wealth, which is one of the reasons why I favour a greater measure of public ownership.
The Financial Secretary, in opening the debate today, described the Bill as one designed to moderate inflation. He then went on to say that, on the one hand, the Government had given reliefs as incentives to saving but that, on the other, those reliefs had been more than covered by two things, the Tobacco Duty and the Purchase Tax. All that I say will be bound up around those three points which the Financial Secretary made.
First, there is the question of incentives to saving. Despite the very small exceptions to which the right hon. and learned Member for Kensington, South called our attention, by and large the incentives to saving are for the better-off section of the community. I am not against them although I am against the degree to which we have gone in this matter. Nevertheless, it is the fact that a Conservative Finance Bill is again designed to shift the burden from the better-off to the less-well-off sections of the community.
There was an interesting sidelight on this in what the right hon. and learned Gentleman said. He said that the Chancellor was justified in not giving tax relief to all small savers because the circumstances of the time did not permit it. Surely, the same argument should apply equally to the concessions which are now being made to those who are saving on a big scale. There is nothing in the concessions now being made which stipulates that savings among the better-off people should be devoted only to Government securities or should go directly into Government hands.
If it is necessary at this time, in this present crisis, to insist, in the case of small savings, that concessions must be limited to those which go directly into the hands of the Government, why not extend the same discrimination in the case of the large savers? Here again, we see the bias, the prejudice and tendency always on the part of a Conservative Administration to favour those who support them, or who, in the case of the Ton-bridge by-election, do not always support them at the polls.
The tobacco tax can be grouped with the Purchase Tax. It is a regressive tax. It falls equally upon the poor as upon the rich. In fact, it falls harder upon the poor in comparison to their income than it does upon the rich. It penalises the poorer sections of the community and especially the pensioners. One of the meanest parts of the Bill was its failure not to extend to the old-age pensioners relief from the increase in the tax on tobacco.
We cannot stress too clearly that the Purchase Tax is unfair to the small wage earner and that the volume of the tax should be reduced as quickly as possible. Many pledges were made at Election time and many arguments were put forward when we were in power to the effect that a Conservative Government would reduce the Purchase Tax. The fact, is, however, that since the party opposite has been in power, the Purchase Tax has not only been increased in amount, but has been extended to articles which previously did not bear tax. Taking the tax on tobacco and the Purchase Tax together—for this purpose they are virtually the same—once more the burden is being shifted from the better-off sections of the community to the less-well-off amongst us.
I should like to say a word about the Profits Tax, in which there has been an increase. At one time, it seemed to me right and proper to have the differential as between distributed and undistributed profits. I thought that insofar as we were encouraging investment in industry and insofar as we were encouraging saving, it was right and proper to have a very low rate of Profits Tax on the undistributed part of a company's surplus.
I am not now of that opinion, for two reasons. In the first place, I call attention to the provisions of Section 39 of the Finance Act, 1947, which with this differential, makes it easier for companies overseas to offer attractive bids for British companies operating at home. The Financial Secretary challenged my arithmetic when I applied the differential in the case of the Trinidad Oil Company. I think he will find, however—I am taking only the figures in the White Paper—that when we now have a differential of 27 per cent. as between the distributed and the undistributed rate, if the Trinidad Company is held as to more than 50 per cent. overseas it would pay £200,000 less on last year's profits than would a wholly British-owned concern. This seems to me to be giving a great incentive to the transfer of British undertakers to shareholding control overseas.

Mr. H. Brooke: What was in my mind at the time was that the purchasers of the Trinidad Oil Company were proposing to remove the company overseas. If that happened, the considerations which the hon. Member is adducing would not apply.

Mr. Beswick: If the right hon. Gentleman means that the mind and management control, as well as the shareholding control, went overseas, of course the argument would not apply; but it would still be possible, if the mind and management was left in this country and the shareholding control was overseas, a saving of £200,000 would be made. I agree that if the enterprise is wholly taken away from this country, the argument is irrelevant.
There is another aspect of this Profits Tax and the sharp differential which we have in the Bill. The profits ploughed back into a company are becoming, in effect, deferred revenue. For many years before the war it was the practice on the


part of the Surtax payer to set up a company overseas into which he would pay directly his revenues, and he would then get his income in the way of tax-free redeemable debentures. From 1922 onwards there was a constant struggle between the tax collecting authorities and the Surtax payer, the tax collecting authorities trying to stop the gap, the Surtax payer trying to keep the gap open.
It was not until 1938—I think it was—that the late Mr. Neville Chamberlain found it possible to stop the gap by making a retrospective provision in the Finance Act of that year. Now we have the Profits Tax as it now is, and the gap has now been opened wide again, because, in effect, all the profits escape the major part of the tax, if they are ploughed back into the business. There follows capital appreciation and the opportunity to acquire income simply by selling the capital which does not bear tax at all.
Through this differential rate of Profits Tax we are now making it possible for Surtax payers in this country to escape their obligations, and making it easier for them than it was between 1922 and 1938, when they had to go to all the trouble of setting up special private companies overseas. Therefore, I feel that the difference embodied in the Bill, the difference of 27 per cent. between the rate on distributed and the rate on undistributed profits is wrong, and I hope that at another time we shall make it possible to close this differential and stop a good deal of the tax free capital gains which are now being made.
There is just one other thing I want to say, and that is about this theory which has been dignified by the name of a law and which comes from the Economic Secretary. It is the theory that if we put up prices sufficiently we mop up excess purchasing power.

Mr. Gordon Walker: "Boyle's first law."

Mr. Beswick: Yes, "Boyle's first law", and I understand that the hon. Gentleman was not backward in claiming two further laws today. It helps to justify the opinion which I have formed of the Economic Secretary during these debates of ours on the Bill, that he takes too

great a pride in his own apparent achievements.
I paid the milk bill a week ago. I happened to be at home when it had to be paid. It came to 19s. 4d. We do not take much milk for our small family. When this Government started to stop the hole in the housewive's purse our bill for the same amount of milk was about 12s. 8d. The Government are stopping the milk subsidy, and they are stopping the bread subsidy. Bread has to go up in price, milk goes up in price, the Purchase Tax on many things has been increased. I ask the Economic Secretary whether he really feels that this law of his, which is enshrined in this Bill—

Mr. Speaker: It may be enshrined in it, but it is certainly not printed in it.

Mr. Beswick: It is enshrined to some extent in Clause 1, Sir.

Mr. Speaker: Clause 1 has to do with the Tobacco Duty.

Mr. Beswick: Yes, but this is all part of "Boyle's law."

Mr. Speaker: There is nothing about "Boyle's law" or the milk bill in Clause 1.

Mr. Beswick: No, Mr. Speaker, but it is all part of this business of mopping up surplus purchasing power by way of increased taxation on necessities, and that is the point I was coming to. Of course, Sir, I accept the fact that it would be wrong of me to enlarge on this matter, but in a very few sentences I shall finish what I want to say.
The small wage earners do not follow the implication of this law. What they believe is that there should be an increase in their wages to meet the result of this "Boyle's law", in this case the increase in taxation embodied in Clause 1. It is not possible for the wage earner, earning £8 or £9 a week, to pay such bills as I have referred to for essentials. The Economic Secretary can show his brilliance from the Dispatch Box as much as he likes, but he will not convince the wage earners of the rightness of his argument. He has been described as the Rasputin of the Treasury. I understand that in recent weeks there has been some


reassessment of the influence of Rasputin.

Mr. G. R. Mitchison: An agonising reappraisal.

Mr. Beswick: Yes, an agonising reappraisal of the influence of Rasputin.
Personally, I would describe the Economic Secretary as the Catherinewheel of the Conservative Party. He splutters off his brilliant sparks, but at the end is a very insubstantial stub, and, for all the fine words which have been said about it the same goes for this Bill. It makes no great contribution to the health of the economic state of our nation, and I, for one, am rather sorry that we are not to vote against it.

12.37 p.m.

Mr. William Shepherd: I do not propose to follow the hon. Member for Uxbridge (Mr. Beswick) through all his arguments, and one reason why is that I could not understand them all; indeed, some of them were so confused and muddled that he did not seem to understand them either. However, I want to take up two things he said.
He talked about the "profession of tax evasion which has sprung up". I think it is wrong to say that in this House. It may well be true that the profession of tax avoidance has sprung up. That is materially different from tax evasion, and I think it wrong to cast such a slur upon the accountancy profession as to describe its activities as tax evasion.
Another thing the hon. Gentleman said which rather surprised me was that he thought we could turn to the nationalisation of industries to gain more wealth—presumably for the Chancellor of the Exchequer. All I can say is that if my right hon. Friend had to rely upon the returns made to him by the nationalised industries he would be in a very bad way, and the ordinary taxpayers would have to bear a correspondingly larger burden. One of the advantages, I should say, of abolishing nationalisation would be that the spread of taxation would be wider if the nationalised industries were run profitably under private auspices.

Mr. Beswick: For the sake of the record, may I point out that I did not say that we should go in for nationalisation as

such? I used the words "public ownership", which means something very different.

Mr. Shepherd: I cannot deal with that argument, because were I to do so I should get into the trouble which beset my predecessors in the debate.
I was very interested to hear what the hon. Member for Orkney and Shetland (Mr. Grimond) said about getting rid of the difficulties of deciding particulars of tax on lamb's wool or a hockey stick, but, like all the ideas of the Liberal Party, his argument had nothing concrete about it. It is very difficult for Treasury Ministers, particularly at the time of the Finance Bill, to deal with the multitude of problems with which they are beset. Indeed, the whole problem of Government in the twentieth century is one of immense difficulty, but it is no good saying that this is bad and it ought to be altered without telling us something of the manner in which that can be done. Once again, our Liberal friends proclaim the difficulties and run away from the remedies.
I do not think that the Chancellor can claim this Finance Bill is a very startling affair. He did a number of things earlier in the year which of necessity detracted from the weight and merit of the Bill and the attention given to it, but it is a sound Measure, in line with what we need at present. The conduct of the Bill through the House has been very commendable indeed, and I am not restricting my remarks to the three representatives on the Treasury Bench. I extend them to include hon. Members opposite. They have conducted their opposition keenly but without unnecessary obstruction. We have succeeded in debating a Finance Bill without sitting all night, a much more sensible arrangement than that which prevailed when even we on this side of the House were the Opposition. I hope that the example set in the last five years will be followed, because there is no need to keep the House discussing these things overnight.
I have said that the Bill is not very exciting, but it has one exciting part, that is, Part II, where relief is given to self-employed persons to provide themselves with pensions. I am sorry that I have to join issue with the Financial Secretary over the method by which this is being


achieved. We had a number of discussions in Committee and on Report on whether the process of removing policies from Section 379 of the Income Tax Act, 1952, instead of keeping them under Section 388 was the right one. The Financial Secretary has said what he thinks about it, but I remain unconvinced that the method chosen by the Treasury is the right one. I believe that during the passage of the Bill the Government should have made the necessary Amendments.
The Government spokesman has been good enough to say in the course of debate that this legislation cannot be regarded as unalterable, and that when considering whether they should change their policies from being under Section 388 to being under Section 379, those concerned must remember that it is conceivable that the law may be altered within a short time. That is all very well, and we welcome it, but it would have been better if we had started with a state of affairs where that difficulty was not thrown upon those who have to make the decision, and also on the Treasury itself.
I realise that the whole of our pensions legislation is in a terrible tangle. It is almost as bad as the rent restrictions Acts. I have been trying to study it in the last few months and trying to understand it. It must be straightened out so that we can get a clearer picture and people will know where they are going. When the Financial Secretary starts on the task of co-ordinating and consolidating legislation in respect of pensions, as he must do, I hope that he will be good enough to consult as wide a range of interests as possible. Some of the difficulties have arisen in the present situation because, for reasons of security, the Treasury had to consult too narrow a range of interests, and it received advice which I do not think was entirely disinterested. I regret that we have seen no reference in the Bill to Entertainments Duty. I will content myself—

Mr. Speaker: The hon. Member is complaining that there is no reference to Entertainments Duty. That should be a sufficient pointer to him that he cannot discuss it on Third Reading.

Mr. Shepherd: I was about to say that I would content myself with expressing this very small measure of regret.
The hon. Member for Uxbridge referred to the taxation of profits and the hon. Member for Orkney and Shetland said that he was worried at the extent to which risk capital was not available in this country and about the lack of savings. It is true that this difficulty arises not only in this country but even in the United States. Some people when they condemn the extent of the Profits Tax are inclined to overstate the inability of companies, under existing profits taxation, to extend their activities. Even during the worst years of taxation it was true that they could provide quite handsomely for their expansion, and even today when we cannot get sufficient personal savings the company figures are by no means bad.
When we come to happier days, as I am sure we shall, when we can further reduce taxation, I hope that it will be borne in mind that there is still need to retain demand in the United Kingdom. The Finance Bill, as I have said, is not exciting, but it is in line with the country's needs at present. I am sure that when we come to discuss the next Finance Bill we shall see that this Bill has played a part in the country's recovery.

12.48 p.m.

Dr. Horace King: The right hon. and learned Member for Kensington, South (Sir P. Spens) poured scorn on the Opposition for barking this morning without following up with the bite of a Division. I hope to show him that when he was in Opposition his party indulged in much more vicious growlings and snarlings on a similar occasion and similarly deprived themselves of the indulgence of carrying the Motion to a Division.
Before attacking the Bill, it would be discourteous if I did not take the occasion of paying compliments to the Chancellor of the Exchequer, the Financial Secretary and the Economic Secretary on their patience, endurance and skill through the long hours in which we have been discussing this inadequate Measure. The Chancellor bears a heavy load of responsibility these days, second only to that of the Foreign Secretary, and he has


carried his maiden burden of a major Finance Bill through the House very well.
It is with more than courtesy that I congratulate my right hon. Friend the Member for Huyton (Mr. H. Wilson), my right hon. Friend the Member for Battersea, North (Mr. Jay) and my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) and the team round them for being equally patient, equally skilful, equally enduring, but having the added advantage of being always right. This has also been a maiden venture for my right hon. Friend the Member for Huyton and, on this side of the House, we look forward to the day when halftime comes and the teams change ends at the next Election and my right hon. Friend will assume a much more important part of the burden than merely directing an attack on somebody else's Finance Bill.
I should like also to make a passing reference to what has been aptly called by the Daily Telegraph the gracious occasion when the Chancellor eagerly and movingly accepted the Amendment which, in this memorial year, places the holders of the Victoria Cross in a special fiscal class, as they are indeed in a uniquely honoured class in the annals and affections of the British people.
One of the remarkable features of our debates in this and the last Parliament is the restraint shown by the Labour Party in opposition, as compared with the behaviour of Government supporters when they were vindictively belabouring the late Sir Stafford Cripps for trying to do the job which the Chancellor is trying to do today—and the best of the right hon. Members opposite now pay tribute to the late Sir Stafford—even when they were in the traditionally cooler atmosphere of a Third Reading debate like this. I want to be critical this morning, but less intemperate than most of them were on a similar occasion.
Judged by this Bill, the Chancellor may be compared with Nero, who fiddled while Rome was burning after setting fire to Rome himself, or to Mrs. Partington, trying to push back the sea of inflation with her broom, except that Mrs. Partington was not partly responsible for the fact that the tide was coming in. As the Bill has progressed through the House of Commons, outside the House of Com-

mons the effects of the Bill have begun to appear in the anxiety and anger of workers in the motor industry, whose plight is not unconnected with the credit squeeze perpetuated in the Bill, and in the spate of new wage claims which are now hitting industry, stimulated by the price increases imposed by the Finance Bill.
That is moderate criticism of this Chancellor when compared with the remarks of the right hon. Gentleman the present Secretary of State for Air, the right hon. Member for Flint, West (Mr. Birch), who called Sir Stafford Cripps a Diocletian, sneered at his vegetarianism and told him to "retire and grow cabbages". Yet Sir Stafford Cripps was exhorting people to an awareness of their social responsibilities, while the Secretary of State for Air, in a Parliamentary style for which he is, fortunately, almost unique, on 12th July, 1949, could say this:
We first get exhortation, this flood of stuff from the Chancellor in his wretched, broken, commercial Johnsonese which he thinks will have some effect on us. Exhortation never has much effect on the people of this country; I am devoutly glad to think that they never react to that sort of tripe."—[OFFICIAL REPORT, 12th July, 1949; Vol. 467, c. 274.]
At any rate, the Secretary of State for Air could not be accused of imitating Dr. Johnson.
The first major criticism I would make of this Bill is that it does very little to meet what the Manchester Guardian recently called
the desperate problems of an economy operating at high speed on the brink of insolvency.
Indeed, we have had today the example of an hon. Member on the Government side trying to find, when considering the major finance Measure of the year, something to say connected with the present economic plight of the country and being unable to make a speech that was in order.

Mr. Speaker: I hope that the hon. Member himself will be more successful.

Dr. King: I take the hint which Mr. Speaker has so kindly given me.
Unlike some hon. Members opposite, when they were in opposition, we do support the Chancellor in the parts of this Bill which encourage savings, and we support him in his exhortations and inducements to people to save. Too many


people are living up to the hilt of their incomes. Unfortunately, 2 million of the poorest are living up to the hilt of their incomes, because they cannot afford to save in any case, but I would be out of order to pursue that point further.
In that connection, it is good to know that the teachers, having been stung into protest by the Government through their treatment in the Teachers (Superannuation) Bill, this week decided once more to continue their voluntary free services to the country in support of national savings. They have done before, and will do again now, a great job for which I am certain the Chancellor will be grateful.
The measures in the Bill which stimulate saving in the country are welcomed by everybody who has Britain's interests at heart, but the appeals are pitched at a low level—higher interest, or the chance of prizes in the jackpot. It is about time that the Chancellor made clear that the Premium Bonds—whether one supports them or not—cannot save Britain. They are at best merely a trivial device to tempt those who like a flutter into doing a bit of saving at the same time. Although I am not a gambler, I hope that they will succeed in that very limited objective.
The scheme itself does a disservice to Britain, because it is included in the Finance Bill, and for this reason. It does a disservice to the Government themselves, in so far as it suggests, as it did to one trade union branch in my own town, that we can solve Britain's economic problems by taking part in a 9½d. raffle. There is a grave danger that some may think that they have done all that they need to do for Britain when they stake their interest on a bond—not on Britain, but on the chance of winning £1,000.
Byron once evoked the glories of ancient Venice, and wrote:
Oh for one hour of blind old Dandolo!
As I have listened to the debates during the long passage of this Bill through the House, I have longed for one hour of the late Sir Stafford Cripps, or, indeed, one hour of the man who wrote the great and enlightened political essay "The Middle Way," hardly one gleam of which illuminates this Budget.
But there is one gleam. I am very glad that the Chancellor resisted making the concession demanded for school fees. To quote the Chancellor himself, writing about the middle class in "The Middle Way":
Insofar as snobbery and class alienation exists in this country, it is largely a product of class differences in education … It would do nothing but good to the children of every class if the early years of life were spent in the same school. This comment on education has been made merely to show how the insecurity of middle class life might be reduced while at the same time achieving for the nation a reform which is in itself worth while.
I congratulate the Chancellor on standing by "The Middle Way," and refusing in this Bill to take a step back on the road towards equality of opportunity in education.
It is true that there are good things in this Bill, but not many, and singularly few more on Third Reading as compared with Second Reading. It is true that when the Financial Secretary opened the debate, he turned a telescopic eye on the concessions which had been made in Committee, and he was loyally supported by his right hon. and learned Friend the Member for Kensington, South, who even scraped the barrel so deep that he took pride in the tax concession made to Members of Parliament.
To express the opinion Which I am certain many of my hon. Friends on this side hold about what has happened to this Bill since Second Reading, may I quote the much more dignified criticism of the late Sir Stafford Cripps in the same debate by the present Lord Privy Seal, who everyone in the House wishes will soon be fully recovered and back in his place? Let the Lord Privy Seal speak for me this morning:
First of all, the concessions have been quite infinitesimal. We are grateful for what we have received. … Therefore, the right hon. Gentleman, with his long experience of Finance Bills, has been able to balance himself precariously in his place and reject nearly everything which has been put forward."—[OFFICIAL REPORT, 12th July, 1949; Vol. 467, c. 222.]
That is not quite true this time, for while the Chancellor has steeled himself against our pleas for the old-age pensioner who likes his pipe of tobacco, or the footballers, or the theatres, or the co-operative society savers or the friendly society


savers, he has conceded favours to one class of people during the passage of this Bill through Committee, and that is the poor little rich man who finds it difficult to save on an income of £5,000.
We welcome the reduction in Stamp Duty on house purchase, which is designed to help young couples to buy houses, but it is nullified by the Chancellor's other policy of higher mortgage interest rates, which makes it harder for them to buy houses or to keep up their payments if they have started to buy one. One hand of the Chancellor gives, and the other hand takes away.
We welcome the increases in family allowances for which the finance is provided by the Bill, but nevertheless, the Bill, with its dearer bread and dearer tobacco, following upon dearer milk and the items introduced in "Boyle's law" mops up most of the increased benefit which the Chancellor has provided. Again, on the one hand the Chancellor gives, and on the other he takes away.
We welcome the provision made for the self-employed to provide for themselves a pension in their old age. But, as the Bill now leaves us, even this reform concentrates the major benefit on people whose incomes, surely, are adequate enough for them to save without any help from the Government. I will not narrate the excellent minor fiscal improvements of this Bill. I would only say that detailed as some are, many of the details which may seem trivial to the average hon. Member, are of supreme importance to the little groups of people in the community to whom at last they render justice.
I regret, however, that the Chancellor did not take the opportunity of putting right many of the little details suggested in the admirable passages of the Report of the Royal Commission on the Taxation of Profits and Income. I should be out of order were I to talk about which ones I particularly regret are not there; but at least he should have done something for the parents of incapacitated children.
The Bill makes provision for a cut of £100 million in Government expenditure. It is in true Tory form that one of these cuts, as we have now learned, is to be a mean little £1 million which, like the tobacco charge and the bread charge, will hurt the poorest people in the country. That is the new charge on school meals.

But, in spite of the Chancellor, in spite of the Bill, in spite of the cut, I urge people still to allow their children to take the school meals, because I believe that this is one of the fundamental reasons of the health of our school children.
But why did not the Chancellor slash the heavy burden of the interest debt instead of increasing it as he does in this Bill? If he desired to make cuts in Government expenditure, why did he not tackle the crushing burden of rate interest which in the National Debt, local government debt and mortgage interest, acts as a disincentive to industry and investment, all of which is crippling the State?
The effect of his cuts in the social services part of the finance he provides in the Bill are seen in education which we were to have discussed next week, and which I hope we shall still have the opportunity of discussing. The Chancellor should know that his economies are being achieved by freezing the building programme; by cutting down the standard of school buildings in such a way that one of the direct results of the cuts in this Bill is that the Association of Education Committees, by only a narrow majority, carried a resolution last week asking for the resignation—

Mr. Deputy-Speaker (Sir Charles MacAndrew): Order. I think that the hon. Gentleman is digressing. We are now debating the Third Reading of the Bill.

Dr. King: I apologise, Mr. Deputy-Speaker, if I have been carried away beyond the scope of the debate. The heaviest burdens of Government expenditure are interest and arms and I gather that I should be out of order were I to pursue that subject any further.
I wish to say only one other thing. I measure this Bill from one point of view against the needs of the poorest people. I wish that the Chancellor had accepted the suggestion of the hon. Lady the Member for Tynemouth (Dame Irene Ward) which would have benefited some of those on fixed incomes. Most of the poor people are below tax relief, so they get very little out of the Bill.
"The Middle Way" makes the heart of its great case the value of the subsistence level on which the poorest people


have to endure. In 1936, under the Rowntree figure, for a man, his wife and three children, this was 53s. Since that time, and taking the index at 1936 as 100, the cost of living has risen to 217, so that Rowntree's subsistence figure would now be £5 15s. The present National Assistance scale for such a family is £5 12s. in addition to the National Assistance rent aid; so that, roughly, the poorest people are just over the subsistence level by the amount of rent given under National Assistance.
It is against that background that we place those items in this Finance Bill which add to the bread prices; which refuse to the old-age pensioners a concession to compensate for the new tobacco charge, and the handing, during the Committee stage, of a concession to people earning over £5,000 a year of as much money—nearly—as would have met the cost of giving the old-age pensioners their tobacco at the old price.
Today, we take leave of a Bill which increases the price of snuff; puts a tax on heady cider; allows licensees to sell quarter bottles; meanly adds a few coppers to the already swingeing tax on tobacco and refuses relief to old-age pensioners of this new burden; introduces into State finance a petty raffle; encourages saving in the Post Office on the one hand but, for what I think are doctrinaire reasons, discourages similar saving in the co-operatives or friendly societies, fails to make a clear and clarion call to the nation and fails to say that only by hard work and saving and the cutting down of the unfair tribute which wealth extracts from the labour of those who work, can this country match up to the problems which confront it.
I hope that if we are unfortunate enough still to have this Government in power next year, the Chancellor's next Finance Bill will draw much deeper draughts from "The Middle Way" and fewer from "The Right Road for Britain."
I end by referring to a letter which appeared this week in The Times, in which Mr. Douglas Jerrold, apparently a supporter of the Government writes:
We are not looking forward to a slow decline eased by the grudging charity of the Inland Revenue, but for sweeping measures

of reform, administrative, constitutional, fiscal, which will sustain and buttress the necessary foundations of a free society. That is what we voted for, and that is what we have a right to expect.
Incidentally, that is what supporters of hon. Members on both sides of the House voted for, according to their lights and that is what we have a right to expect from any Chancellor. It is because none of these things is to be found in this Finance Bill that many Tory supporters up and down the country are beginning to regret that they voted Tory in the last Election.

Mr. John Harvey: The hon. Member should not believe that.

Dr. King: Sooner or later we on this side of the House will have the opportunity of introducing a better Finance Bill, and the earlier that time comes the better.

1.8 p.m.

Mr. E. C. Redhead: I wish to deal with what the Chancellor has stressed as the major purpose of this Measure. I ask the right hon. Gentleman to believe that it is in no destructive or critical sense that I approach this topic. I wish to underline the point made by my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) earlier in the debate and I have a sincere and earnest desire to help the Chancellor, even though one may dissent from the means he has chosen to carry out his major purpose.
Time and again during the discussions on the Finance Bill, and the Budget to which the Bill gives effect, the right hon. Gentleman has returned to the fact that this is a savings Measure, though he has shown scant regard for the real deterrents to saving which exist in Government policy in other directions. I do not wish to dwell upon this, neither do I wish to dwell on those policies which make it increasingly difficult for thousands of people in this country to contemplate the possibility of saving when they are hard pressed to meet their ordinary daily expenditure. But the Chancellor has taken every opportunity to emphasise that the only concessions he is proposing to make at this stage are concessions designed deliberately to offer inducement and encouragement to saving.
In addition, he has sought to introduce new measures, new securities and new inducements which he hopes will be sold to the public to increase national savings. He offers incentives, such as those in Clause 9, and new securities, suggested in Clause 43. Although many of us dissent from the particular methods and means which he has chosen to embellish his campaign, I think none of us will dissent from his view that there is a real and imperative need by every legitimate means to increase the sum total of national savings. He himself has expressed it in eloquent phraseology from time to time, both in this House and elsewhere, when he has spoken of the desirability of mounting a great new national savings drive.
I beg the Chancellor to believe that we on this side of the House are at one with him in recognising the importance of that feature. I do not want in one little degree to detract from the importance of that as a desirable piece of policy, but I think the Chancellor will agree that the drive for national savings, just as much as a drive for any other national purpose, requires to be efficiently manned, properly campaigned and pursued with a full assurance of an efficient machine.
I think that the Chancellor will agree with me that that is what he needs for promoting his aim and stimulating this great campaign that he desires. Let me assure him that, despite my dissent from some of his means, my sincerity may be judged by the fact that only this morning I accepted an engagement to take part in a part of that campaign in the next few months in my constituency. However, I think he will agree that there is tremendous importance to be attached to that body to which he has rightly and deservedly played tribute in our discussions—the National Savings Committee. If there is to be a national savings campaign of real intensity, this will be the spearhead of the attack.
I want to challenge the Chancellor and to ask whether he does not feel that it is utterly inconsistent and incongruous, in the pursuit of the desire that he has, to respond to the ill-informed clamour about the necessity of cutting down the hoards of bureaucrats, by including among his victims in that regard the full-time paid

staff of the National Savings Committee itself.
At this moment, when the committee is to be charged with new major responsibilities, when it is being urged to press in the industrial sphere for new means of enlarging national savings, when it is being told officially, as it was told at a meeting I attended only a week or so ago, that it must direct its energies in the autumn to taking up these new opportunities, especially in the schools where the teachers' ban has now been lifted—at this moment, when the Chancellor is pleading for a new campaign in respect of new bonds and new securities, it is not realistic to say to the National Savings Committee that it must suffer a cut in its full-time staff. This decision has been taken regardless of the fact that the officers who are in the field and who will have to bear the burden of the campaign have sought, unfortunately without effect, to make it clear to the Chancellor and the Financial Secretary that they view this cut with the gravest apprehension and feel no confidence of being able to mount a real major campaign to fulfil the Chancellor's purpose.
I hope that neither the Chancellor nor the Financial Secretary will respond by saying that, after all, this is only a relatively small matter. Incidentally, I should like to correct the figures given by my right hon. Friend the Member for Smethwick (Mr. Gordon Walker), who said that the existing complement of 657 was to be cut to 644. The proposal is to reduce the staff to 613 in the course of the next 18 months. I hope it will not be suggested that that is perfectly all right, that there is nothing very much in it and that it is a minor cut which can be undertaken in the ordinary course of administration. In fact, the Chancellor will be unable to justify the view that this is in any sense an extravagent department swollen beyond all reasonable measure. I think that he will acknowledge that since 1949 it has, by its very success in building up the voluntary side of the movement, contributed to the reduction of its own staff to the extent of 31 per cent.

Mr. Deputy-Speaker: Does not this also come under Supply?

Mr. Redhead: I must bow to your Ruling, Sir Charles. I am trying to make the point that the Chancellor must take


account of the machinery by which he hopes to achieve his purpose. In asking him to consider this matter, I confine myself to stressing this point. This committee should not be treated with the utter disregard with which the Financial Secretary has treated it, in that it failed to secure a proper opportunity of consultation about these measures in the Whitley Council. I appealed to the Financial Secretary, and he responded by declining to receive a deputation.
I beg him to realise that this is not only a matter of a proposed cut, but one of the manner in which it has been decided upon without proper consultation, indeed without consultation at all. It ill lies with the Government to wax indignant about outside employers not consulting their workers, in comparable circumstances, if the Government treat their own employees in this fashion. I beg the Chancellor, if he has any desire to see his campaign succeed, not to ride roughshod over the men who, by their knowledge, experience and enthusiasm, have proved their usefulness in the prosecution of campaigns in the past.
These men are eager to prosecute the new campaign, but they are feeling a distinct sense of discouragement about the way in which they have been treated. If the Chancellor or the Financial Secretary feel that some administrative economies may still be possible, then, even at this late stage, let it be demonstrated by conceding to these men the opportunity of a personal discussion. I hope that the Chancellor will think about this matter again.

1.18 p.m.

Mr. John Cronin: I should like to join with my hon. Friend the Member for Itchen (Dr. King) in paying some compliments to hon. and right hon. Members on the Government Front Bench for the way in which they have conducted our proceedings on the Bill. We have always found the presence of the Chancellor of the Exchequer very agreeable. It is for that reason that sometimes we are sorry that we have not seen more of him during our debates.
We have been pleasantly entertained by the Economic Secretary to the Treasury, who has submitted most excellent arguments, and one must also

express full admiration of the excellent and equable way in which the Financial Secretary has conducted himself. He dealt with us with good will. I think that he will concede that there has been a large degree of co-operation from the Opposition. We have done our best to facilitate the passage of the Bill. For that reason, it is rather unfortunate that the Government have not been more co-operative in considering our Amendments and new Clauses. Several of them would have been of great value and would have much improved the Measure, but they have been rejected, one feels for somewhat insufficient reasons.
Perhaps it is noteworthy that most of the Amendments and new Clauses which were approved were submitted from the Government side of the House. I fear that most of them were associated with attempts to improve the economic status of members of the community who are less deserving than others. We on this side of the House have attempted to help people who require help. I will not press that point further, because I fear that I may be trespassing on the rules of order.
The Financial Secretary made an interesting speech this morning, which contained some statements which came to me rather as a surprise. When referring to tax avoidance, he used some rather surprising expressions. He referred to people who indulge in tax avoidance as "revenue nibbling rats." Nobody who avoids Income Tax has any sympathy from the House, but nevertheless there is nothing illegal about it and nothing ethically improper about it, and the term which the right hon. Gentleman used seems rather harsh to apply to them, particularly as there is a whole profession which has as one of its principal works that of avoiding tax. We have some distinguished accountants in the House.
The Financial Secretary also referred to the anti-inflationary effects of saving for the purpose of annuities. He used a picturesque phrase; he said that these concessions for the sale of annuities were a bait for the tiger of inflation. I suggest that they are not so much a bait for the tiger of inflation as a deferred meal for the tiger of inflation. What will ultimately happen is that a lot of money which is not spent now will, when that money is converted to annuities, be spent


on some future occasion. The inflationary effect is therefore largely postponed.
The Financial Secretary ended his speech on a somewhat emotional note, when he referred to the concessions made to the holders of the Victoria Cross. I hope that I am second to none in the House in my admiration for those very distinguished people who have earned the Victoria Cross, but it seems to me that their status could have been equally improved by raising the emoluments associated with the Victoria Cross rather than by making them tax-free. It seems an unfortunate precedent to start to make a class of the community a tax-free class, having a special privilege which the rest of the community does not enjoy. As I have said, the holders of the Victoria Cross could have been helped equally well by increasing their emoluments.
This Finance Bill contains several excellent features which require some congratulation. There is no doubt that Part III, which permits self-employed persons to save for the future, earns the approbation of the whole House. We on this side of the House do not feel that the way in which it has been drafted is impeccable, but the general principle must be a matter of justice being done, and it is a reform which is very long overdue. It is also agreeable to see that the Chancellor has found time to implement some of the recommendations of the Royal Commission. It is perhaps unfortunate that more of the Royal Commission's recommendations have not been given space in the Finance Bill, but that is outside the Bill, and I must not trespess on your patience, Mr. Deputy-Speaker, in referring to it.
It appears that the Finance Bill has an anti-inflationary effect which is based on three parts of it: first, the suspension of the investment allowance; second, the inducement to save; and third, the surplus created. These appear to be powerful props in our fight against inflation, but I feel that these three factors in themselves have some rather undesirable features.
There is a provision in Clause 15 for the suspension of investment allowances, which of course is anti-inflationary, but I feel that not sufficient provision is being made to ensure that the capital equipment of this country is being replaced at a proper rate. Admittedly,

according to recent figures, investment has increased over the last year, but there is no doubt that in the provision of new capital equipment we are lagging very much behind our competitors, the United States, Soviet Russia and Germany. I wish that the Chancellor, while maintaining the anti-inflationary effect produced by the suspension of investment allowances, could have found more means in the Bill to encourage the replacement of capital equipment for industry. The economic future of this country depends to an enormous extent upon that.
The next anti-inflationary facet of the Bill is to be found in the various inducements to save. I think no one will quarrel with the provision which makes the first £15 of Post Office Savings Bank interest free of tax. That is not only an inducement to save; it also removes from the Inland Revenue much unnecessary work which it has been forced to undertake as a result of the provisions of the Finance Bill of 1951, which empowered it to make investigations.
The other inducements to save seem to have rather dubious features. One of them, I think, is that it will now be possible for persons of substantially large incomes to save much more economically. As a result, parts of their incomes which would have been devoted entirely to savings will now be available not only for savings but also for expenditure. I do not think that the implementation of the Millard-Tucker recommendations in the way which the Government have adopted will be completely anti-inflationary. It will also cause a good deal of transfer of savings and a good deal of expenditure which would previously have gone into savings.
Very simply, it makes saving rather cheaper and, therefore, sets free funds for expenditure which, in the high income groups, is often of a somewhat extravagant nature and inflationary in its effect. I feel that it is particularly unfortunate that the Government have changed the recommendations of the Millard-Tucker Report in making the limit £750 instead of £500, because that increases the somewhat inflationary effect produced by Part III of the Bill.
The third important anti-inflationary effect of the Bill is produced by the increase in the Budget surplus. That is achieved, first of all, by Clause 1, the increase in the Tobacco Duty, and,


secondly, in Clause 29, the increase in the Profits Tax. Nobody will question the anti-inflationary effect of those two Clauses, but, as has been pointed out, it is unfortunate that the Tobacco Duty will chiefly affect those of the low income groups and those who, therefore, least deserve to be penalised in this manner.
The Premium Bonds proposal has been the most controversial part of the Bill. It has given a great deal of offence to a large part of the nation. I do not propose to refer to the ethical side of the question, because Premium Bonds and gambling belong rather to the twilight side of ethics and, except to those skilled in the matter, what is right and what is wrong is not very clear. There is no doubt that this Government gambling is giving offence to a very large number of religious-minded people, and I think their views should be respected. Certainly they should be respected if there is no compensatory advantage for those not taking part in the gambling.
These Premium Bonds will not be an anti-inflationary measure. As has been pointed out, a large amount of money will be spent in administration of the scheme. The bonds will all have to be registered, and there will have to be an increase in Civil Service staff as a result. The prizes will be dealt with by the recipients in much the same way as the winners of football pools deal with their prizes. They will almost certainly be spent in an extravagant and riotous manner. Very few people who receive a windfall by prizes in lotteries save their money, whereas if they received interest in the normal way probably they would deal with it in a less inflationary manner. I feel that the prizes from Premium Bonds will have a substantial arithmetical effect and also a psychological effect in causing an increase in inflation.
The Bill seems to be weak and ineffective compared with the real economic needs of the country. The very best measure of the likelihood of this Finance Bill succeeding is found in certain external circumstances. For instance, the £ is still weak. It has weakened substantially since the Finance Bill was brought in. That is an indication of how overseas financiers feel about the possibility of inflation receding in this country. They are speculating against the

£. The Chancellor must have noticed that gilt-edged securities have declined in value since the Finance Bill commenced on its way. That, again, is an indication from the stock market that inflation is likely to proceed faster than ever and the value of the £ is likely steadily to decline.
Perhaps most serious of all is the position of our gold reserves. They have increased over the last few months, but they have increased to a comparatively minor extent during a time when one would expect some improvement in the gold reserve position. The real storms which are going to blow on our gold reserves will come in the next few months. It would seem that the world as a whole has considerable doubts as to the extent to which the Finance Bill would be efficacious in solving our problems. One feels that the Finance Bill is almost irrelevant in the way it deals with our very serious economic position. The country is faced with the possibility of its economic future being burned up by inflation. The Chancellor of the Exchequer, with grace and a most agreeable manner, has walked up to the conflagration and fired a well aimed shot with a water pistol.

1.34 p.m.

Lieut.-Colonel Marcus Lipton: For some years I have rarely had occasion to thank the Government for anything, but I have two reasons for doing so today in respect of two Clauses in this Bill. I do not know whether any back bench Opposition Member has ever been able to claim paternity for two Clauses of a Finance Bill which are in the exact verbal form in which they were submitted. Having an immense respect for the highly specialised skill of our Parliamentary draftsmen, I regard the fact that each of my two Clauses was accepted in the exact form in which it was submitted as an apex of Parliamentary achievement. That is not impossible, obviously, but it is extremely difficult.
The first of the two Clauses to which I want to make very brief reference is Clause 3, which removes an irritating annoyance which has been in being for a considerable time. The Clause will enable people to buy less than half a bottle of wine or spirits at a local off-licence. In view of the combination of a lower standard of living and the continued need


for economy the number of people who cannot afford to buy as much as half a bottle of wine or spirits may increase. They will also have to deny themselves the pleasure of going to the "local" because of the high price of drinks and the even higher price of standing a round of drinks if one meets friends there. I am very grateful to the Chancellor for having accepted that Clause.
I am also grateful to the right hon. Gentleman for accepting Clause 14, relating to the holders of the Victoria Cross. The whole matter rose by way of a fluke. Although I have had the privilege of knowing a number of V.C.s for several years, I had not realised, until the centenary celebration took place recently, that the £10 annuity paid to the holder of the Victoria Cross was subject to tax. I took advantage of the first available opportunity which presented itself of remedying what I thought was a defect. The Chancellor accepted the Clause in terms which moved me almost as much as did the sight of the handful of men marching past the Queen in Hyde Park. I do not think I can pay him a higher compliment than that. It is quite true that in respect of this Clause we are legislating from emotion, but a little oasis in the arid wastes of the Income Tax law will not do very much harm.
Here I must take up a point made by my hon. Friend the Member for Loughborough (Mr. Cronin), who suggested that it might have been better to have increased the annuity. I strongly dissent from that view. The annuity paid to the holder of the Victoria Cross does not in the slightest degree represent any attempt to place a monetary valuation on the achievement. The fact that it is so small shows that it has nothing at all to do with any attempt to assess the heroism which led to the award of this honour.
It may be that through a million-to-one chance there is somewhere in this country an off-licence holder who has won the V.C. in the ranks during the last war, or the war before. In that case, he will derive double advantage from this Bill, particularly if he is also to sell South African wines or spirits which may have been consigned from Lourenço Marques.

Mr. H. Brooke: Then he would have two types of miniatures.

Lieut.-Colonel Lipton: In that case, he would have additional benefit conferred on him by the Bill.
I do not want to occupy the time of the House by referring to other matters to which reference has already been made, but I should like to get back to normal and utter a note of criticism about the Premium Bonds. The costs in connection with the issuing of these lottery bonds are likely to be fairly substantial. What I have not been able to understand is why it is necessary that the bonds should be registered in the names of the individual bondholders whereas if they were dealt with as the equivalent of bearer securities an immense amount of labour would be saved and the job of keeping an accurate record would be quite unnecessary. I hope that the Chancellor will consider whether the method which he has proposed is absolutely essential.
I should have liked to have seen something done to mitigate the effect of the increased Tobacco Duty on old-age pensioners. I do not like the extra charge for school meals, the increased prices of bread and milk, nor the other disabilities that the people are to suffer. However, in conclusion, I should like to thank the Chancellor for the two concessions to which I have referred.

1.41 p.m.

Mr. Frederick Mulley: I apologise to the Financial Secretary for not having had the pleasure of hearing his speech, but I find it best to keep out of the debate if one wants to be called. I find that sitting through the debate is not calculated, as a rule, to enhance one's chance of catching the eye of the Chair. Today, therefore, I thought that I would try a technique different from that which I adopted yesterday. It was not intentional discourtesy to the right hon. Gentleman.
As my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) said, this Bill is so dull that it is worth voting neither for nor against. I have no doubt that it is relief at parting with it on the part of hon. Members on both sides that explains the scanty attendance today. At least, I hope that that is the reason, and not that Friday is not recognised, for sessional allowance purposes, as being a Parliamentary occasion. When we have Measures of this importance debated on


Fridays, it is rather remarkable that the Government should have sought to make that distinction in the payment of the sessional allowance.
This Finance Bill is the concluding item of a Budget calculated, as the Chancellor said, to encourage saving and to provide incentive, but I fail to find in it anything of a really incentive character. As a friend said to me, "The only thing in the Budget that is calculated to increase production is the small increase of family allowance for the third child and subsequent children." I must tell the Financial Secretary that, as one who has two children, on purely financial grounds the incentive is by no means large enough.
The only other thing of note in the Bill is that it has become by way of a benefit Bill for my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). If there is an off-licensee who is also the holder of the Victoria Cross, I hope that he will take the trouble to tell my hon. and gallant Friend about the double benefit which is conferred upon him. We shall not see in future Finance Bills a proposed new Clause dealing with the sale of small bottles from off-licences. It is a matter of great satisfaction that those two anomalies, which have existed for from 50 to 100 years, have been remedied. That they have been remedied is due to the efforts of my hon. and gallant Friend, and the holders of the miniature Victoria Cross and the would-be sellers of miniature bottle of spirits have cause for satisfaction.
I welcome both those improvements, but I venture to suggest that no other members of the public have any great reason to be thankful for the passing of this Measure. It begins, in Clause I, with a very unsatisfactory extra duty on tobacco. We have already spoken very emphatically about the effect of that on the old-age pensioners. I freely confess that some special exemption for them might not have been appropriate, but I think that, at least, a general rise in their pensions to cover the cost of the additional Tobacco Duty would have been very reasonable.
In general, I regret this easy way out that Chancellors of the Exchequer are

inclined to find by taxing the smoker. As I mentioned in Committee, the cost of the health service is completely covered by the revenue derived from tobacco—I believe that it is covered one and a half times. I think that we ought to protest at the picking out of a particular section of the public to bear the burden of the additional revenue which the Chancellor saw fit to impose this year.
It has been said that anybody who can find a way of taxing non-smokers or non-drinkers without at the same time taxing smokers and drinkers would receive the very ready aid of the Chancellor. It may be impossible to devise a tax on those rather miserable people, in many instances, who neither smoke, drink, gamble nor partake of any of the vices in which some of us weaker people are prone from time to time to indulge. However, I do not wish to labour this point, which was fully debated at an earlier stage.
Clause 13 contains a very miserable concession in regard to the method of relief on contributions to the House of Commons Members' Fund. I have a small interest, in that I shall have a few shillings extra as a result of the Clause, but frankly I regret this item, because it is designed to make a special tax provision for Members of Parliament. I do not wish for any special tax concession. All I ask for is reimbursement of expenses and a proper salary for the work we do here. This is not the way to deal with what is clearly a difficult point—and here I may say that I am not attempting to deliver now the speech that I should have liked to have made yesterday.

Mr. H. Brooke: I feel that I must correct the hon. Member, because it would be a great pity if the country got the idea that we were legislating especially for ourselves. Actually, the Clause removes a discrimination against Members of Parliament and brings them into line with the rest of the citizens.

Mr. Mulley: I am very glad to know that, and, of course, I accept the right hon. Gentleman's view, but it seems to me that a special Clause relating to a special fund for Members of Parliament could only mean that we were not covered by the ordinary law. As far as I understand it, this is a benevolent fund.


Contributions to funds of a similar character would not entitle any person to relief of tax in that respect, unless it was done by way of covenant or something of that sort. If we fell within the ordinary law, we would not need a special exemption like this, and I regret that it is in the Bill.
A great deal has been said about what is now Clause 43, that dealing with the so-called Premium Bond lotteries. I do not take the view that there is anything wrong in the principle of a State conducting a lottery; and perhaps I should make it clear that it was for that reason that I did not vote against the Clause during the Committee stage. I think that it is rather narrow to find moral objection to the State conducting a lottery when, at the same time, the State derives revenue from football pools—and, I suggest, rather too much revenue—from betting and from similar activities. I agree with what has been said about the enormous administrative costs of the scheme.
I understand that already the Post Office is submitting a Supplementary Estimate of over £1 million for the salaries and expenses of staff concerned with the administration of this scheme. It would be interesting to know what the estimate is likely to be for a full year. Then, no doubt, in addition, there will be items on the Stationery Office Vote for printing probably 30 million, 40 million or 50 million copies of literature with which the Government flood the country in an attempt to procure investment in this scheme.
Not that the Chancellor has been the first to propose a new scheme. I was interested to find what I gather was the first instance of a premium bond scheme of this sort. I gather that a gentleman by the name of August Scherl made proposals of an almost identical character in Prussia in 1904. It was a scheme to promote thrift among the labouring classes. I do not think that that antecedent is a particularly happy one. In fact, in 1904, in Prussia they did not see fit to put this scheme into operation.
While I hope that if the scheme goes through it will succeed, I feel that it was introduced into this Bill by the Chancellor as a smoke screen to the total failure of his economic and fiscal policies in other respects. I am bound to say

that in that device he has been very successful. He has been able to concentrate such discussion and interest as there has been in his Budget on this, which is, after all, a very small matter, and to take away the public discussion and interest in a matter of very much greater moment.
One could comment on other matters, of course. The incentive to saving by the remission of the first £15 of tax on savings of a certain character is to be welcomed, although I regret that the Chancellor has had to confine it to a very narrow field. As my right hon. Friend the Member for Smethwick said very forcibly, if the Chancellor is concerned with saving he should welcome it whether it is in Government securities or in some other form. Certainly the co-operative societies had cause to feel that this Clause discriminates against them.
On Clause 34 we welcome the acceptance of works of art in satisfaction of Estate Duty, and I hope that in subsequent years the Chancellor may feel able to go a little further into the possibility of Estate Duty being paid in kind. I should like to see, apart from works of art of a special aesthetic character, good equity shares accepted by the Treasury, and no doubt the test that could be applied in those cases would be their possibility of capital appreciation. Certainly, I think this is a move, although a very small one, along a path which would yield great advantage to the Treasury.
To sum up, this has not been a very exciting Bill. It is not, in my view, calculated to advance the economic prosperity of the country, and I am sure that those who voted for the party opposite at the Election just over a year ago did not expect to find this year a Finance Bill of this character. Certainly they did not expect that Government spokesmen in our debates would have taken such a pessimistic and serious view of the country's economy.
I do not want to detain the House. Indeed, I suspect that already too much time has gone into the passing of this Bill. We part with it today with no sorrow and with no joy, and, as far as I can see, next year's Finance Bill is likely to be just as bad.

1.55 p.m.

Mr. G. R. Mitchison: If I may add yet another law to what is rapidly becoming "Boyle's Code," I would suggest that the attendance on the Third Reading of the Finance Bill is in inverse proportion to the inadequacy of the Budget, the reason being that an inadequate Budget is usually a dull Budget, and that on the Third Reading we are confined to what is in the Budget and we must not digress too far into questions of its adequacy.
Well, there it is. I would suggest that the course of this Finance Bill through the House and Committee conforms to this definition of it. It is perfectly true that we proceeded with speed—sometimes with lightning speed—through the Clauses. We took a great deal more time on the proposals to supplement the Budget and, with two exceptions—here I would like to associate myself with the compliments which have been paid to my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton)—those efforts were unsuccessful.
Those two new Clauses have considerable importance in some ways, for the one about small bottles represents not only the disappearance of a hardy annual but also a mild kick by a Tory Government against an injustice originally put on and kept on at the instance of the brewers, while the second one, relating to the Victoria Cross, has at this time an obvious moral appeal and value to all of us. But they represent quite small amounts in monetary terms.
The only other concession that the Opposition has wrung from the Government in this matter is the inclusion of Oliver Cromwell's trousers or whatever it is that the right hon. Gentleman had in mind when he admitted articles of historical value, as well as articles of aesthetic interest, to be taken in for purposes of Estate Duty. Therefore, I may say that while we are always grateful to the Chancellor, the Financial Secretary and the Economic Secretary to the Treasury for their constant courtesy and attendance here, we really have not got very much to thank them for in the way of concessions to the Opposition during the course of the Budget.
Let us see what the Budget is about. This is a savings Budget and, according

to the Financial Secretary, "we must fortify the surplus." That sounds very good. The object of it, of course, is to help public saving, and, so far as I can judge—and, no doubt, a learned economist will correct me if I am wrong—that is a fair summary of the total effect of fortifying the surplus. As a result, there will be, in many of the changes proposed, some conflict between public saving and private saving, for the private saving that it is desired to encourage, if it is to be encouraged in the Budget, is to be encouraged to some extent by taxation concessions, and that actually is the position we have to consider in relation to some of the Clauses in the Bill.
Let me take two instances. I suggest that there has been a remarkable difference between the extent to which financial concessions have been made to encourage some private saving and the extent to which they have been made to encourage other private saving. The first tax concession that I want to mention is in Clause 9 of the Bill, where £15 interest on certain deposits, Post Office savings banks, trustee savings banks, and we now add the Birmingham Municipal Savings Bank deposits, are to be free of tax, and that is to be an encouragement to saving.
At this point the right hon. Gentleman draws a very sharp and, it seems to me, a completely unconvincing line. He says, "I will encourage saving in this matter just so far as the money in question goes directly into the Exchequer, and I will not go any further." He therefore refuses to encourage saving in the form, for instance, of co-operative dividends and in the form of deposits in other savings banks which substantially fulfil the same general purpose as the particular savings banks selected by the Government. In short, when it comes to small savings by small men, we find that the right hon. Gentleman draws a very sharp line and says, "I will only encourage these if and in so far as they come directly into public funds."
The right hon. and learned Member for Kensington, South (Sir P. Spens) in his remarks, to which I shall have to make some further answer shortly, expressed the hope, no doubt the generous hope, that this concession would be enlarged still further, but it is one of those


things that are to happen, like increases in Members' pay, in years to come. We have to consider what is happening this year, and apparently this year that particular enlargement, obvious though it is both I should have thought on moral grounds and on the general principle of encouraging savings, has to wait.
We now come to another concession also made to encourage savings and it is, of course, to encourage such savings in a very different class of people. Here, we notice that so eager is the Chancellor to extend this concession that he has actually done so in the course of the progress of the Bill through Committee. I am referring, of course, to the Millard Tucker concession—roughly the Millard Tucker concessions because they do not quite follow that—made in Part III of the Bill.
What is the effect here? I ask the House to bear in mind that this is the same right hon. Gentleman and the same Government who refused to make concessions in favour of small savings purely on the ground that these particular small savings do not go directly into public funds; nor do these savings go directly into public funds, but they have been very differently treated. Let me say at once—it has been said already and I repeat it—that we are glad of the acceptance in principle of the proposition that there is a class of people in employment, small businesses, and so on, who have not had a fair share of the opportunities to save and of the tax inducements given to encourage saving of that kind. There is no dispute about that.
We entertain some doubts on the whole business, which I shall mention in a minute, but on the principle, none whatever. What we do take exception to is that the Chancellor, having refused extension to cover small savings in the matter of co-operative dividends, municipal bank deposits, except the Birmingham one, and the like, then goes out of his way to accept an Amendment in Committee for the purpose of letting in people who are making incomes of between £5,000 and £7,500 a year.
It is said, as regards those people, "Well, there are persons who make a great deal of money for a short time, and it would be fair to make some allow-

ance for that, and to provide for the cases where they have a long waiting period at the commencement of a short earning career, or where, as perhaps in the case of skilled surgeons, their working career, by the advance of age, cannot be as long as it could be in other cases."
We appreciate the point, but it is highly significant of the attitude of the Government, and of Government supporters in this matter, that although that kind of case was used as an argument, no attempt whatever was made to limit this concession to that kind of case. We suggested one form of doing it. We have not the ingenuity or the resources of the Treasury in this matter, and if we could suggest one form, I venture to suppose that the Treasury could have suggested dozens, if it had wanted to. It could quite easily have been met. That concession, even if it were justifiable at all, could only have been justifiable, as we see it, to meet that particular type of case.
No attempt whatever was made to limit it in that direction. I say quite bluntly that this seems to me to be a most serious matter in this Budget, not so much in itself, but as the clearest possible indication that the Tory Government have not changed their spots in the least, and that in dealing with questions of savings in a time of national crisis and national emergency, the attitude that they take towards those who are earning between £5,000 and £7,500 a year is entirely different from the attitude they take towards those who put their savings into co-operative societies and small municipal banks.
I ask everyone in the House and others outside, to take note of that difference of attitude, and to draw their own conclusion as to how much of the country is really represented by the Tory Party, and how much ought to be represented at the next time the country has a chance of expressing its opinion on the matter.
I took leave to make one reservation—and I make it still—about the general proposition here. I think that it is very significant that towards the end of the discussion on the Millard Tucker proposal, two supporters of the Government who have a particular experience of these matters from the point of view of life insurance made comments on exactly the same lines. I quote from what was said in HANSARD on 10th July by the hon.


and gallant Member for Cheltenham (Major Hicks Beach), who sits on the other side of the House, and who cannot be accused of being a particularly mutinous Member among the Government supporters. He said:
People who have experience of the insurance business"—
and this is what we are talking about—
are quite certain that the Clause will be largely unworkable, will create a vast amount of work for the Revenue, and do a great deal of damage to many pension and insurance schemes which, after all, are for the benefit of employees.
His hon. Friend the Member for Horsham (Mr. Gough), saying much the same thing, pointed out that the other type of scheme which he suggested could have been included in this provision was the type of scheme which
… mainly provide pensions for the lower salary and wage grades in the country."—[OFFICIAL REPORT, 10th July 1956; Vol. 556, c. 277–281.]
I suppose that I have a most remarkably nasty and suspicious mind, but when I heard that kind of thing from the Tory benches opposite I said to myself, "Here, they are providing for one type of scheme, and failing to provide for the one which mainly provides pensions for the lower salary and wage grades of the country."
I can see objections to it. I can see difficulties. This is one of the provisions in the Budget, of which there are quite a number, the future working of which nobody can foresee. We have had that said a very great many times. "We do not know how it will work," say the Government; "it will save the country somehow, but we are not quite sure how, or to what extent." Perhaps it was a trial effort, and they may go rather farther next year; but the choice of this particular subject for their trial effort seems, to my mind—and now I think I must accept the fact that it is a very nasty and suspicious one—to be rather remarkable.
The right hon. and learned Gentleman the Member for Kensington, South, to whom I listened, as he knows, with great respect and an almost complete difference of opinion, told us that one of the things this Budget did was to remedy injustice. He picked out a number of small injustices to illustrate his contention. I have been considering those particular in-

justices which have been remedied. Here again, we find the same sort of thing. Clause 12 provides for relief from tax on delayed remittances of overseas income. This will probably mainly affect limited companies; I can see a limited company, sitting in a curious place where limited companies are embodied and do sit, weeping bitterly for the injustice it has suffered for so many years and which it now finds remedied.

Sir P. Spens: I am obliged to the hon. and learned Gentleman for giving way. That is, I think, an injustice which very largely affects authors more than anybody else.

Mr. Mitchison: I am glad, for many reasons, that injustices to authors should be remedied, and I agree with the right hon. and learned Gentleman that it does to some extent affect authors. But there are people worse off even than authors. It seems rather remarkable that, if one is setting out to remedy injustice in one's Budget, one should pick upon all this type of injustice and so obstinately refuse to do another thing which I should have thought was a quite obvious thing to do.
There have been changes in Tobacco Duty before now, and on every occasion something has been done to provide for that increase not falling on the old-age pensioner. This time, that is not done. The Government have, curiously enough, discovered that, although it has been working for many years, it is not really workable. Of course, I do not know, but my suspicious mind thinks that if one intends to remedy other injustices it is a little rough to choose the very same Budget to deny to old-age pensioners the relief they have always had before in these circumstances.
There are other things in the Bill, but I do not want to take up the time of the House unduly at this stage. It seems to me that this uncertainty to which I have referred can be found also in the proposals about Premium Bonds. This is not a case of making a tax concession at all; it is supposed to be an inducement to provide savings. After all, Premium Bonds are rather old; I think they go well back before the time of the Prussian of 1904. I think we used to have them in this country in the eighteenth century, but I have not checked on that since this discussion has been going on.

Mr. Mulley: The point I was making was that 1904 was the first date when a scheme of exactly this sort was mooted, where the prize money on the same basis, was to consist of the whole amount of the interest.

Mr. Mitchison: I am very glad to accept that correction from my hon. Friend. I am merely pointing out that the idea of Premium Bonds is certainly not a new one. Of course, what happened about Premium Bonds was this, that there was a change in the general moral outlook on these questions, and it was as a result of that change that Governments ceased to issue any type of Premium Bond.
This is, as my hon. Friend the Member for Loughborough (Mr. Cronin) very rightly observed, the twilight of ethics, and I am certainly not going to claim that I personally have any moral objection to gambling. I supported, and should always support, a proposal to free from the present legal restrictions small lotteries for non-profit-making purposes. The importance of the matter is this, as it seems to me. This Clause raises an entirely different question, namely, whether a Government are either right or justified in disregarding the views on a moral question of a large proportion of the population, whose general co-operation that Government are seeking in savings and the economic effort.
There is no doubt that this Premium Bond scheme offends a great deal of religious opinion, and a great deal of opinion that I would hardly call religious but would certainly call conscientious; and a great many people who object on those grounds are the very people who would think savings absolutely right and would do their best to promote them.
It may be that the leading people in the National Savings movement have assured the Chancellor that they think it is all right. I say to him, as has been said before, that in my constituency—and no doubt it is true also in other parts of the country—there are very many people who have thought it right to promote National Savings on grounds partly patriotic and partly moral, but who will, in fact, be shocked by this proposal.
I do not believe that that is the right thing to do. One is asking for a national effort. It may work; I do not say it will

not. A good many people like gambling, and many people may come in on it. But, in the long run, it cannot be right to do that, having regard to the state of public opinion, and I do not believe it pays to do the wrong thing for motives which at the moment appear to be entirely ones of rather narrow expediency.
This proposal for Premium Bonds must be classed with the Millard Tucker proposals—the two main proposals in the Budget—as things the effect of which the right hon. Gentleman does not know. The Premium Bond proposal will involve a certain amount of expenditure by way of additional staff and the like. No doubt there will be considerable subscriptions for Premium Bonds, but how far will it be fresh money? That is the question which cannot be answered, and when we look at the Bill as a whole it is very fair to point out that the two major efforts in it to promote savings are both schemes the extent and effect of which nobody can foretell. That is not conclusive, but it is fair criticism.
I go a little further. The right hon. and learned Member for Kensington, South had a financial heaven—the reduction of the standard rate of Income Tax. There are other ways of lowering the burden of tax than by reducing the standard rate, and the reduction of the standard rate has one element in common with the Premium Bond proposals, which is that the Surtax payer, who is paying most tax, gets more than anyone else out of either of those proposals. We can reduce Income Tax just as much in a different way by dealing with allowances and with the lower limit. I suggest that the effect on the economy would, in the long run, be not merely just as good but a great deal better than the right hon. and learned Gentleman's financial heaven.

Mr. Geoffrey Stevens: What company allowances has the hon. and learned Gentleman in mind when he talks of giving the same benefit by increasing the allowances?

Mr. Mitchison: I am not talking about company allowances, but about the standard rate of Income Tax. Of course, it involves companies as it involves individuals, but I do not think it right, at this hour of the afternoon, that I should


keep so many right hon. and highly distinguished Gentlemen sitting here impatiently waiting to be quit of the Finance Bill by embarking upon elaborate discussions of the effects on companies. The main point is perfectly clear.
Here is a Finance Bill which does precious little, if the dangers which the country faces today are anything like as great as public opinion and the Chancellor combine to tell us. Its total effect is rather small. It could have been larger. Concessions could have been made, more encouragement could have been given to private savers. But I suggest that a very great deal more was required, although I should not be in order now if I went into what was said on Second Reading and at other stages of the Bill.
Taking the Bill as it is, I find two features in the very limited sphere which it covers. It conforms to good Tory pattern, because it gives most to the comparatively prosperous and refuses obvious concessions to those who are badly off. Secondly, it conforms in another respect—it is highly uncertain in its operations. Even if at the best it could get anywhere near a sufficient remedy for our present difficulties, it is certainly true that nobody knows whether it will attain that best at all.
The net result of it may be precious little and on the wrong lines—for instance, a change from one form of scheme to another in relation to the Millard Tucker proposals and from one form of saving to another in connection with the Premium Bond proposals. That is all the Tory Government have to offer the country to meet the financial difficulties for which their own policy is so largely responsible.

2.24 p.m.

The Chancellor of the Exchequer (Mr. Harold Macmillan): I have no reason at all to be anything but grateful for the tone and mood in which we meet today to complete the last stage in the long journey from the introduction of the Budget to the Third Reading of the Finance Bill. The hon. and learned Member for Kettering (Mr. Mitchison) wound up the debate for the Opposition in a speech which I have heard him make on several occasions, and rather characteristic of his style. There is a certain

monotony in his querulousness. I wish he would cheer up a little occasionally and think well of somebody. He talks all the time about his nasty suspicious mind. I am afraid that he has put the injury upon himself. Behind it, he is a good-hearted fellow. It is just the way he talks.
This debate does not show an overwhelming surge of bitter hatred against the proposals of the Bill.

Mr. Beswick: And no enthusiasm either, judging by the number of hon. Members opposite.

Mr. Macmillan: That is because they know the Bill will be passed without opposition, and that is a very satisfactory end to our journey. It is an occasion on which I should like to express my tribute of thanks for the admirable way, from my point of view, in which the discussions have been conducted. At times strongly-held views have been argued with great persistence, but never with obstruction, and I am grateful to the right hon. Member for Huyton (Mr. H. Wilson) and his team for the way in which they have led the Opposition through these discussions. It has been good-humoured throughout, and we have kept very reasonable hours, with only one late night, and even that was a joint effort. I am grateful for all this.
I do not think there has been any point of great principle which has roused much emotion, except perhaps the discussion of a matter of principle to which the hon. and learned Member has just referred—that of the Premium Bonds. I recognise that in certain quarters there are strongly-held opinions against this method. I do not agree with them, but I want to make it clear that we recognise that they are held. Fortunately, there are very many other methods besides this by which people like that can help in the savings movement.
The hon. Member for Loughborough (Mr. Cronin)—and this was repeated by the hon. and learned Member for Kettering—referred to this method of raising money with an element of chance as being somewhere "in the twilight of ethics." As I understand that it may be the main means by which the finances of the Labour Party are to be revived, I think that is rather an unfortunate


description. I am adding to my collection of tickets, which I am receiving from various constituencies, and I shall now regard them as my twilight collection.
I should also like to pay my personal tribute to the work of the Financial Secretary and the Economic Secretary, on whom I depend for so much, and to express my thanks to them. I am indeed fortunate in being so well served.

Mr. H. Wilson: What about the Solicitor-General?

Mr. Macmillan: He has been equally good, but we did not have to call on him quite as much as, I remember, the previous Administration did. In their case, he has gone off to St. Helens; and I do not know what hon. Members opposite think of him now.

Mr. Gordon Walker: What about the President of the Board of Trade?

Mr. Macmillan: We have tried to conduct our own business, and I do not think we have been altogether unsuccessful, with the support of right hon. Gentlemen opposite. I have tried to act in the same spirit.
I am afraid that my part has often been to refuse to accept, or to advise the House to refuse to accept, a number of Amendments and new Clauses, and many of them have been Clauses which in themselves were very attractive; but, as I said, they would all have cost a great deal of money and I could not afford them this year. I was able to accept two Clauses in the name of the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), who is here, and I now feel that the Brixton-Bromley axis is firmly established. I shall look to him for help in the future. Like anyone who has been here since 11 o'clock, I hope to take advantage of Clause 3 as soon as possible.
This year I had to confine such proposals and suggestions which I could accept to those relating to savings. I want to say again that the proposal regarding the £15, and in the form in which it was made, is something for which the savings movement has long asked, and there is no one who has been associated with the savings movement, of whatever party or political com-

plexion, who has not expressed to me deep gratitude for giving it this additional incentive to its work. I regard that as a very important part of this Bill.

Mr. Beswick: There has been no criticism in this House about tax exemption in this case. The criticism has been that it is not extended to other forms of small savings. As this is the first time the right hon. Gentleman has spoken on this subject, and as we have had no information from the Economic Secretary in response to the invitation which came from his side of the House as well as this, will the right hon. Gentleman tell us whether he proposes to extend this concession next year, or when times are better?

Mr. Macmillan: I think that at this stage I had better say that I do not propose to anticipate my next Budget in this respect, but this concession, and in this form, is one which was welcomed by the whole savings movement and has been asked for in this form by the savings movement.
The abolition of the Stamp Duty for small houses is something I have always wished, and I think it will be a permanent advantage. It is, of course, true that with higher rates of interest the costs rise, but rates of interest are not as permanent as systems of taxation, and I think that this will be of permanent advantage to the small house dweller.

Mr. Mitchison: The right hon. Gentleman may have seen an article in the Solicitors Journal recently criticising this concession. The suggestion is that it will not work. Is the right hon. Gentleman still satisfied that it will?

Mr. Macmillan: Yes, absolutely, That is one of the things of which I am quite sure.

Mr. Mitchison: Has the right hon. Gentleman seen the article?

Mr. Macmillan: It was called to my attention, and comment was made upon it.
I am also glad that we have been able to introduce the completely new scheme for the retirement provisions of the self-employed. I think it has been generally welcomed on all sides of the House. My


right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) and the hon. and learned Gentleman the Member for Kettering are not in complete agreement about the precise method of this scheme, but I think there has been general approval of the innovation, and I believe that our proposals, as they are embodied in the Bill, make a very important and new departure, and will be of the greatest value to the country and to a class of people, from small people to larger and more successful practitioners, self-employed persons, who represent a very important element in the life of our nation. I think it is a very valuable thing that—with broad approval in principle—the House is able to set this scheme upon its way.
There are one or two detailed questions which, out of courtesy to the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker), I should like to answer. He asked me what would be the cost in terms of overheads of the Premium Bonds. I can reply only that I do not know what the ratio of overheads will be until I know what the sales are. Obviously, they depend the one upon the other. However, we have hope that if the sales are satisfactory they will meet equally satisfactorily the kind of overheads we have in mind.
He also asked me whether I could make a calculation as to what would be the chances of success of a Surtax payer at a high rate if he were to be successful in winning a prize upon these bonds. I have not been able to make that calculation, and I do not think it would be easy to make it.

Mr. Gordon Walker: What I really asked was, how much would a top Surtax payer have to earn to get 4 per cent. tax free on his investment? That must be calculable.

Mr. Macmillan: He does not gain anything upon the bonds unless he draws a prize. I cannot tell what the chances are of a top Surtax payer buying a Premium Bond and then drawing a prize. It seems to me that even Mr. Ladbroke could not tell one that. [Interruption.] It is not as easy as that, but I will try to make some researches, and if I am successful I will certainly communicate during the Recess with the right hon. Gentleman.

Mr. Gordon Walker: It is a matter of arithmetic.

Mr. Macmillan: The right hon. Gentleman says it is simple arithmetic. He also used a phrase which, in a don, shocked me. He said it was "workable out." I hope his knowledge of arithmetic is better than his use of the English language. It is not easily "workable out" at all. Not at all. It was a very bad phrase.
Now I shall try to anticipate a future Budget in the sense of certain tasks laid upon us. I think one or two of them are in the minds of those who have taken part in our discussions, at any rate in the minds of those who have been particularly interested in our discussions. The first is an undertaking which I gave on 26th June to review the whole structure of the Entertainments Duty. At my request the Customs and Excise have already started work on this. I was asked about that, and that has been put in hand.
I also undertook, on 19th June, to deal in one way or another with the frustration of pioneer industries and their relief under the United Kingdom tax system. In the course of the coming year, I shall be reconsidering the recommendation of the Royal Commission on overseas trade corporations. If I were to do anything on those lines it would, of course, include the pioneer industries' problem. There are many important recommendations by the Royal Commission, which have been mentioned today and which we must continue to study over the next twelve months.
But all that is in the future, and the immediate question that is really occupying most of our minds is whether what the Government are trying to do in the Budget and in this Bill and in general for the economy is likely to prove successful. I should be out of order if I were to say much upon this subject, except upon the very broad lines which have been followed by several speakers.
As I told the House on 3rd July, some of the signs are encouraging; others are not so encouraging. The trade figures which were published yesterday were an example of this. Exports reached a new record level, but imports also rose, and the trade gap was considerably wider in June than in May.
Nevertheless, I do feel that the issue lies in our hands. That is the appeal I


should like to make in this atmosphere, which has been so generous and so genial, and is particularly so now, in our consideration of the Bill.
I think that it lies in our hands. We enjoy in this country today the highest standard of living that we have ever had in our long history. We are all determined to do what we can to see that it is preserved and improved, but it is clear to me that today the watchword must be and must remain, "No relaxation". We must continue the full rigour of the measures, fiscal, monetary and other controls, which the Government and Parliament may use, and if hon. Members opposite feel that I should use them more rigorously, they will at any rate agree with me that we should maintain those that I have thought fit to use.
Even so, neither Government nor Parliament in my view can solve this problem alone. It will require a national effort of prudence and restraint, and I believe that is today the general mood and purpose of the nation. Therefore, in spite of the criticisms that this is a dull Finance Bill and that there is nothing in it or that there ought to have been more in it—although I think that the proposed surplus of £470 million to £480 million and all the other measures amount to quite a lot—I believe that I have the whole House with me in expressing the hope that this national purpose will be successfully carried out.
I hope that I shall be able to claim that the proposals which it has been my duty to put forward from time to time, both in the Budget and outside the Budget, and the proposals enshrined in the Finance Bill, will make some contribution to that end. That will not interest me half as much or at all. All that will interest me is that we shall, as I hope, succeed in a purpose which I think is common to the House and to the whole nation.

Question put and agreed to.

Bill read the Third time and passed.

Orders of the Day — COMMONWEALTH WINES

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Barber.]

2.42 p.m.

Mr. John Tilney: Although throughout today we have been debating the Third Reading of the Finance Bill and various arithmetical calculations of the chances of a top Surtax payer drawing a Premium Bond, I hope that the House will forgive me if I quote some figures to support my contention that the Commonwealth wine producer is not receiving a fair deal.
The figures that I quote are in gallons of heavy wine in bulk in cask. They show that in 1938–39 we consumed in this country no fewer than 2,860,000 gallons from Australia, whereas in the year 1954–55 that figure had dropped to a mere 265,000 gallons, or less than one-tenth of the pre-war figure. I agree that there has been an increase in the consumption of light wine from Australia, but that is really negligible compared with this massive drop. The drop from pre-war in imports from Cyprus has been as much as 50 per cent., whereas the figure for Spain has been maintained and those for France, Italy and Germany have been increased.
In 1925, the then Conservative Government made an economic decision to encourage the production of wine in the Commonwealth. That decision was fortified by action in the 1928 Budget, and particularly at Ottawa in 1932. So much so that between 1932 and 1938 the consumption of Commonwealth wine rose from 4 million gallons a year to 5½ million gallons. What exactly happened at Ottawa? Duties were stabilised then and foreign light wine paid 4s. a gallon, whereas Commonwealth light wine paid only 2s. Commonwealth heavy wine paid 4s. a gallon and foreign heavy wine 8s. There was, therefore, a 50 per cent. preference differential between the foreign and the Commonwealth wine but, due to increases in duty during the war and the halving of light wine duty by Sir Stafford Cripps in 1949, that differential was reduced from 50 per cent. for both types of wine to 20 per cent. for the heavy and 15½ per cent. for the light.


And, of course, the fall in the value of money, which has really been shown by the increase in the price of wine, makes that preference differential even less important, because the duty is not on an ad valorem basis.
Therefore, the situation now is that whereas foreign light wine comes in paying only 13s., Commonwealth heavy pays as high a duty as 40s., whereas at Ottawa they were both equal. It is rather odd to recollect that in 1949 the late Sir Stafford Cripps thought that he was taking action to encourage the consumption of Commonwealth wine. Yet, what has happened? The import of light wine from Spain has gone up from 22,000 gallons to 488,000, and from Italy from 6,000 gallons to 462,000, from Germany from 35,000 to 325,000 and from France from 554,000 to as much as 2,314,000 gallons. Admittedly, there has been an increase in the production of light British wine, but when light and heavy are taken together the consumption of British wine is less today than it was before the war.
The import of this foreign light wine is due, it has been suggested, to the need to blend in order to get round some of our Customs duties, or at least the full impact of them. I think that the House should know of the difficulties of the Commonwealth wine producers and of the extra expense that they incur in sending their light wines through a long tropical voyage. It may be said that Commonwealth wine producers have not sufficiently considered British tastes, but South Africa, where there are no fewer than 5,000 wine farmers in Cape Province and where, since Ottawa, many millions of pounds of capital have been invested in the production of wine, has, since 1949, in order to maintain the British market, changed over from her Port type wine to sherries, which are now reasonably popular in the British market. In passing, I should like to express regret that some of our Commonwealth wine producers use the nomenclature of Europe and not their own, although South Africa does, in certain cases, use the names of her local towns and villages.
I have here the shipping figures of some South African vermouth, no less than 25,000 odd gallons, representing 150,000 bottles, which was imported into this

country just before the late Sir Stafford Cripps made an alteration in the Light Wines Duty. That vermouth from South Africa was kept here for quite a number of years, and eventually had to be sent back. The managing director of the South African Wine Farmers' Association, in a letter dated 4th August, 1955, addressed to the Controller of the Statistical Office of H.M. Customs and Excise, said:
The reason for its unsaleability is the fantastic deviation in the structure of the wine duties from those prevailing in 1939 to those at the present time. … We cannot possibly compete in this country with similar wines from foreign sources at the present rate of duties.

Mr. Speaker: It seems to me that the hon. Member is running into difficulties here. If the remedy for the complaint which he is making to the House is an alteration in the Customs Duties, that must be done, of course, by legislation, and it would be out of order to discuss that on the Motion for the Adjournment.

Mr. Tilney: With respect, Mr. Speaker, I wanted to state what had happened in the past and what some people think, although I am hoping to suggest that a statement by my right hon. Friend the Minister of State at the Board of Trade that he has the interests of Commonwealth producers at heart would have a big effect on the atmosphere of inter-Commonwealth trade.

Mr. Speaker: I am still a little uneasy, because I do not see how, if the right hon. Gentleman made such a statement, he could implement it except by some change in the Customs Duties, and to do that would involve legislation. If the right hon. Gentleman did make a statement of that sort, I think he would be talking about legislation, and therefore equally out of order.

Mr. Tilney: I am hoping that possibly by administrative action help can be given to Commonwealth wine producers, and that there would be no need for any legislation to be discussed. I hope I shall be in order in pointing out that, because action was taken, the Revenue benefited very considerably, but to the detriment of the balance of payments, whereas if something can be done to stimulate the consumption of Commonwealth wines, the balance of payments will indeed benefit.
There is a big new television audience, which I believe to be ripe for possible exploitation of the Commonwealth wine market, if only Commonwealth wines can be produced at the right prices. This is what Australia has been trying to do, though not very successfully. Australia has expanded her production in a big way, and is hoping that Great Britain will find a market for that production. Here I wish to quote from the Australian Wine Board's Report for 1954–55, in reference to the Commonwealth Prime Ministers' Conference—not the last meeting, of course, but the one before:
During the Commonwealth Prime Ministers' Meeting in London, our Prime Minister discussed the question with the Chancellor of the Exchequer. It was also raised by our Minister for Commerce and Agriculture prior to the G.A.T.T. conference at Geneva … Although we feel very badly done by in that the duty on Commonwealth wines is now ten times the pre-war figure … it seems more apparent that its significance is only of minor importance to the Treasury.
I am hoping that some action can be taken, either through some volume agreement or in some other way, to help our friends in the Commonwealth, because the cost to our trade of this drop of 2½ million gallons is as much as £1½ million, and yet at the present time the Government of Australia are cutting down our imports because they have not got sufficient sterling.
May I turn for a moment to deal with Cyprus, where the 2s. preference is taken up in extra freight charges, and where no less than 150,000 Cypriots are engaged in the wine trade? May I quote a letter which I received only yesterday about the position in Cyprus?
In order to help the producers, the Cyprus Government has for the last four years or so put forward a scheme whereby we are buying all the Zivania, which is more or less what you might call the impure distillate, and this is done in order to help the growers to sell their vine products and earn a living. It will not be an exaggeration if I tell you that today the Government has invested over £1½ million in the purchase of this distillate. Furthermore, with a view to helping the vine growers, the Government is now purchasing from them raisins which they are forced to make because they cannot sell all their grapes for wine making.
Is it not possible that in this case the colonial waiver, which has been used for products in the West Indies, could be used? May I also quote from an article

in The Times from the Australian Prime Minister?
I believe that the time has come when, in the British Commonwealth, we must give ourselves furiously to think about where we are going and what road or roads we should take. Unless we are conscious of our mutual problems and constantly working on them, we will, as they emerge, have little more to contribute to their solution than a vague and wistful sentiment.
I only hope that our wish to develop Commonwealth trade can in some way be buttressed by economic action. The Commonwealth Producer, which is the organ of the British Commonwealth Producers' Organisation, in the May—June issue of this year, in an article about Commonwealth wines, concludes:
Do Her Majesty's Government intend deliberately to go on denying a proper share of the home market to the wines of Commonwealth producers?
I hope that my right hon. Friend can assure our friends in the Commonwealth that the free trade policy which some people think now dominates certain regions of Whitehall will give place to consideration for Commonwealth products in all future discussions on the trade.

2.59 p.m.

Mr. J. Grimond: I am delighted to hear that a free trade policy dominates certain parts of Whitehall, but I have no desire to sabotage this Adjournment debate, which has been initiated by the hon. Member for Wavertree (Mr. Tilney), or to argue with him about his most admirable speech. There are certain drawbacks about starting one's Adjournment early in the afternoon, but perhaps I may say a word or two about it.
Ottawa Agreements have a more or less unhappy ring for my party, which is, after all, a free trade party, and I make no bones about the fact that to me, in general, free trade is a sound doctrine and really essential for a large trading country such as Britain. I should be very sorry myself if we were to create any unnecessary difficulties for countries like Portugal, which is our oldest ally, or Spain or France or Europe and trade in general.
Having said that, I also feel that free trade is one among many desirable objects. But if it is true that to deviate from the pure milk of the doctrine of


free trade would help the Commonwealth I regard that as desirable. Luckily, Mr. Speaker, owing to your admirable guidance, I am precluded from arguing the course of action to be taken about the import duty, but I feel the least we might do is to encourage by example.
In this House there are frequent entertainments of overseas visitors and visitors from the Commonwealth. I have attended some of them in the company of the hon. Member for Wavertree and I have never been offered Empire wine. I may have been unlucky, but in my experience one is always offered excellent French or German wines. I doubt whether there is a great deal of Empire wine offered by the Government Hospitality Fund. I am not saying for a moment that all our overseas visitors should be offered Empire wines. There are those who think that the French and German wines may be better, but I am not sure there is not a great deal of snobbery about this. Some Australian wine which I have drunk is quite excellent. I do not know how well the best of our Empire wines travel, but some of them, including South African sherries, are extremely good.
Are they offered by other authorities, such as local authorities and the City, where banquets are held? The hon. Member for Wavertree and the Minister attend these banquets frequently, so no doubt they can tell us. I think that the general public should be better educated in this matter. There is in this House a drink called a carafe of wine. I am not an expert on wine, nor, I hope a heavy drinker, but I take a carafe of wine which, I understand, is French. I do not say that it is bad; it is moderately good, but I am sure that we could find an Australian wine which is just as good.
Outside this House one is frequently offered a drink which resembles not so much red ink as blue ink, and which, I suspect, is Algerian wine. I see no reason why a greater measure of propaganda should not be put about to encourage the drinking of Empire wine. Not only would that have the great advantage of doing what the hon. Member for Wavertree wishes to do and save my free trade beliefs, but it would also be keeping within the rules of the House.

3.3 p.m.

Major H. Legge-Bourke: I should like to join in argument with the hon. Member for Orkney and Shetland (Mr. Grimond) about free trade and protection, but I am not sure how far that would be in order and I imagine that I should be out of order in doing so.

Mr. Speaker: That would be out of order, because to restore free trade, as I understand, would involve a great deal of legislation.

Major Legge-Bourke: That being my presupposition, I will not refer to it further, beyond saying that at the moment it seems to me we have a strange mixture of the two. Whereas, on the one hand, we have an element of protection in the old Ottawa Agreements, which cannot be altered as a result of our having signed G.A.T.T., on the other we have an element of free trade in which, as a result of G.A.T.T., we are denied the right to discriminate. But, obviously, this is not the time to argue that matter.
I am interested in the subject particularly in view of what was said by my hon. Friend the Member for Wavertree (Mr. Tilney). During the war, I was stationed in Cyprus and I remember very well some of the wines that were available there. I do not think that my hon. Friend was correct when he referred to the growers having to make raisins of their grapes instead of making wines. I remember visiting South Africa, in 1938, and having an excellent wine made from raisins. It does not follow that if a grower has to make raisins of his grapes, those raisins cannot be used for making wine. I believe that the difficulty is that raisin wine does not travel very well. Therefore, it probably has to be consumed in the country of origin. That is one of the reasons why this country has not had the advantage of the delicious raisin wine produced in the Union of South Africa.
We all sympathise with the view put forward by my hon. Friend. He desires that more people should be made aware of the excellence of some of the Commonwealth and Empire wines. I humbly endorse what the hon. Member for Orkney and Shetland said about Algerian wine. I seem to remember in the 1945–50 Parliament some of us who were then in Opposition having a rather gleeful


debate with the late Sir Stafford Cripps upon the iniquities of importing Algerian wine of the quality then coming in in considerable quantities.
It is rather a pity that consumers in this country should be encouraged by publicans and others to drink Algerian wine when, all the time, there is available Commonwealth wine of a very much superior quality and at a highly competitive price. This is largely due to the fact that there is supposed to be something with which the French are associated which automatically makes any wine coming from such country better than any wine from elsewhere, and that leads to the supposition that Commonwealth wine is inferior.
I take the view that, as in all other things, one must discriminate in this matter. Certainly, it is as ludicrous to say that all Empire wines are delicious as it is to say that all wines emanating from countries associated with France are disgusting. I would say that, on the whole, it will be found that there are just as many Empire wines of high quality as there are wines of equal quality from other countries.
My hon. Friend has done a useful service today if only in drawing public attention to the fact that there are some excellent Commonwealth and Empire wines the consumption of which might well be encouraged in this country to a far greater extent.

3.8 p.m.

Mr. Bernard Braine: I should like to congratulate my hon. Friend the Member for Wavertree (Mr. Tilney) on his good fortune in persuading you, Mr. Speaker, to allow this subject to be discussed. It is a great pity that subjects which touch so closely upon the mutual trading interests of Commonwealth countries and ourselves have to be discussed in Adjournment debates like this, at the end of a heavy day or on a Friday afternoon.
This matter is one which is close to the heart of many hon. Members and we should have liked to have a wider and longer discussion. I must declare a dual interest. First, like all hon. Members, I have a keen interest in expanding Commonwealth trade at every possible opportunity. In fact, I would go a long way towards discriminating in favour of Commonwealth trade, because such trade

is a means of helping to bind together the constituent parts of our wide family of nations.
I must also declare an interest in that I like wine. I do not think that those two interests are incompatible. There may well have been a time when Empire wines could not even pretend to compete with the better quality Continental wines. We have had to deal with much prejudice. Many people will not consume Empire wine because, instinctively, they feel that it is inferior. Yet the most extraordinary improvement has taken place in the production of Empire wine in the last year or two. I had some Australian sweet sherry the other night which was quite distinctive in flavour and extraordinarily good in quality and the most astonishing feature was the low price at which it was retailed.

Mr. Stephen McAdden: I am very interested in this subject and I appreciate what my hon. Friend says about the importance of trying to get people to accept this point of view. He said that our hearts are in this matter, but I wonder whether our palates are in it as well. From his researches, could he tell us how much Empire wine is consumed by hon. Members and whether they are always asking for Empire wine?

Mr. Braine: I am most grateful to my hon. Friend, who has a great capacity for asking penetrating questions. I must confess that my researches have not been so extensive as I should like them to have been because my public duties make it essential that I should arrive here in a sober state. People outside have no monopoly of prejudice; I have encountered many hon. Members on both sides of the House who have dismissed the idea of Empire wines without having ever studied the subject in any detail.

Mr. Speaker: I must remind the House that there is another point about debates on the Adjournment which ought to be borne in mind. There must be some Ministerial responsibility for the matter which is being discussed. In these learned and interesting discussions about the taste of wine, and so on, the Board of Trade is not involved in any way, nor is any Department of the Government. Hon. Members must relate their speeches to some sort of Ministerial or administrative responsibility.

Mr. Braine: I accept your very proper Ruling, Mr. Speaker, but I was distracted somewhat by the most penetrating and, as I thought, relevant question of my hon. Friend the Member for Southend, East (Mr. McAdden). Nevertheless, I should have thought that the Board of Trade had a direct interest in promoting the flow of trade between Commonwealth countries and our own. I should have thought, too, that at a later stage my right hon. Friend would say that an experiment might well be tried by the Kitchen Committee. With my hon. Friend, I hope that such an experiment might be tried at a very early date.
In Australia, a large number of people engaged in the production of wine—exService men who settled in the wine growing districts after the First World War and again after the Second World War—find it very difficult to understand why this country has imposed such heavy and, indeed, vicious duties.

Mr. Speaker: That matter is related to Customs duties and would involve legislation. It cannot be discussed on the Adjournment.

Mr. Braine: I am well aware that if I went on to suggest a course of action which would require legislation I should indeed be out of order, Sir. The sole purpose of my intervention, is as it were, to have some effect on the state of mind of the Minister.
I should have thought that it was a matter of very great concern that it is found difficult for good quality Empire wines to establish the market in this country which their quality warrants for reasons which may be due to legislation, or to other causes, but which, I hope, my right hon. Friend will explore. There may be some way round the difficulty which I feel sure, having heard the arguments, my right hon. Friend would seek to find.
I will leave it at that and end by saying that it is a matter of very great regret to hon. Members, particularly those on this side of the House, that for a fine quality and improving quality Empire product it is found exceedingly difficult to secure a proper market in this country because of the inability of successive Administrations to create the conditions which would make that possible.

3.15 p.m.

Mr. Charles Doughty: I do not intend to detain the House for long, but I want to make one or two references to what has been said in the debate, because I believe that everybody here is anxious to promote the sales of the products of our Commonwealth and Empire, whether they be wines or any other commodities. I am not quite in agreement with my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) when he says that all wines that come from France must be wonderful.

Major Legge-Bourke: I did not say that.

Mr. Doughty: My hon. and gallant Friend said something like that. Even in France barricades were erected because no one would buy their wines. I would not ask the Board of Trade or any other Department to encourage such action in this country or the Empire.
Because I believe the Board of Trade can encourage the sale of Empire wines, I am happy to add my few words to the debate. There are one or two matters in which the Board of Trade can assist both this country and the Commonwealth; its assistance is required in two matters in particular. The first is the need to encourage advertisement and publicity so that people here know what to ask for; and, secondly, the Board of Trade needs to help the Commonwealth and Empire in obtaining knowledge of what this country wants.
Although we talk glibly about strong wines and weak wines—whatever may be the dutiable expression—these are things which we have to consume, and this country has its own tastes and prejudices which are not always met by all the wines which come from the Commonwealth and Empire. It is no good sending hogsheads of wine over here which are not of the quality, the strength or taste which our people want. I am sure that the Board of Trade has that information and could easily circularise it to those who are producing the wine or shipping it from the Commonwealth. It is no good sending wine here and then saying, "I cannot sell it," when the reason is that it is not the type or strength or taste which is wanted,


especially when so many wines are produced which are wanted. The Board of Trade can well assist there.
I believe that it could assist the Empire shippers, when they ship their wine here, in another way. The Board of Trade can assist because it has many treaties concerning the names of wines. What is the good of sending a wine from a distant part of South Africa or Australia and calling it by the name of a village on the Rhine or a district of France? It starts with a disadvantage. It may well be that it will take a little time, education, publicity and advertisement to get the names known among wine consumers in this country, including hon. Members, but my right hon. Friend the Minister of State, Board of Trade, who is to reply to the debate, could also circularise hon. Members and tell us what is likely to be on our wine list.
We cannot sell something by giving it a name that does not belong to it. That was tried with port, but because of the Anglo-Portuguese Treaty it was stopped and new shifts have to be resorted to, such as calling it port type and port strength. We are told that
… a rose by any other name would smell as sweet.
and I am sure that an Australian wine, once it was tried and known, would taste just as sweet under its own name as if it were given a French or other name.
The Board of Trade can help both the wine-producing countries and this country by giving the necessary encouragement and publicity so that this wine can be sold in competition, as it is, with wines that have a longer tradition in this country of sale, service and quality.

3.20 p.m.

Mr. Stephen McAdden: Before you took the Chair, Mr. Speaker, some difficulty arose about Ministerial responsibility, and many arguments which might have been advanced in connection with this Adjournment debate have had to be dropped because they did not come within the sphere of such responsibility. I am a little handicapped in this respect because I do not want to be out of order in a similar way.
My right hon. Friend the Minister of State, Board of Trade, will agree that

in the course of its duties his Department has the responsibility of entertaining large numbers of visitors, trade delegations and the like and that when that happens the choice of wines becomes the duty of his Department and the responsibility of himself and his right hon. Friend. I should like to have an assurance from him that, in the course of the many cocktail parties which it is the duty of his Ministry to arrange for delegations, Empire wines only will be served, and that, for example, there will be served sherry from South Africa instead of that from other parts of the world.
I remember, as I am sure do other hon. Members, a most successful Coronation luncheon in Westminster Hall, when all the wines served were from the Commonwealth and were greatly enjoyed by Members of the House and by many visitors from overseas. I am sure that it would be very useful if, at the various State functions held under the responsibility of his own Department, the Minister would see that only Empire wines were served. I know that it is not the general practice and that in one part of the world difficulties arose because Armenian brandy was served instead of Russian vodka. I think that we should stick to our own wines, which we thoroughly understand, and I hope that my right hon. Friend will use his great influence to see that when his Department entertains visitors from overseas they are regaled exclusively with Empire wines and that thereby their health is assured and accord is promoted.

3.22 p.m.

The Minister of State, Board of Trade (Mr. A. R. W. Low): This has been an interesting but somewhat difficult debate. I should like to congratulate my hon. Friends and the hon. Member for Orkney and Shetland (Mr. Grimond) for the skill they have shown in keeping just within the rules of order. I am in some difficulty because, as I have to answer the case put against me, it becomes rather more obvious rather more quickly that I am getting near to being out of order. I shall not, therefore, be able to comment on some of the matters that have been raised.
I should like to congratulate my hon. Friend the Member for Wavertree (Mr. Tilney) on the great knowledge he has


shown in this important matter. I very much welcome the interest which he and the House have shown in the position of the Commonwealth wine producers. I, like other hon. Members, have two interests. First of all, I share their interests from the national and the Commonwealth point of view, and share it more particularly as a Member of the Government. I share it also as a consumer of some of the Commonwealth wines, which I know well.
I had assumed that my hon. Friend's object was to draw attention to the present position and, if I may say so, he has done it very well. I assume that he cannot want to do more than that because, as has been pointed out, if he seeks to alter the present position, I must deploy the argument that an alteration of the Wine Duties, which are Revenue Duties, can be altered only by legislation. I would say that in fact there is no other field in which the Government properly have responsibility in this matter.
The Government are not, for example, wine tasters. We have no responsibility for helping in the selling and advertising of Commonwealth wines, a suggestion made by my hon. and learned Friend the Member for Surrey, East (Mr. Doughty). I think that if he and the House were to consider that proposition a little further, it would be seen that it is going a little far to say that Government Departments should play a direct part in selling even Commonwealth wines. We do not play a direct part in selling or advertising our own goods even in the important export trade. Therefore, I do not think he will wish to press me further upon that matter.
Some reference has been made by my hon. Friend the Member for Southend, East (Mr. McAdden), and earlier by the hon. Member for Orkney and Shetland, to the use of Empire wines for Government hospitality. There are occasions on which Empire wines are served. There are some occasions—there is certainly one of which I am aware—on which Empire wines are served exclusively. The occasion I have in mind is the annual dinner for the British Industries Fair given at the Mansion House. I think I am right in saying that the wines there are all Empire wines.
From time to time Empire wines are served at other functions, but I can give no assurance that there will be nothing but Empire wines served at Government hospitality functions. I do not think my hon. Friends will really want me to go as far as that, but I will certainly take note of what they have said.
As to the availability of Empire wines in this House, I have no responsibility, but I suggest first of all to the exponent of Liberal philosophy, the hon. Member for Orkney and Shetland, that if there is to be a good supply of Empire wines in the House of Commons there must also first be a good demand, and perhaps the hon. Gentleman would like to start off by writing to the Chairman of the Kitchen Committee, joined by some of my hon. Friends, and press that matter upon him.

Mr. Grimond: A clear lead from Ministers in this respect would be very valuable.

Mr. Low: This seems to be a House of Commons matter which the one representative of the Liberal Party present in the House would like to leave to individual Members.
Now I would like to come to the facts. I am going to risk trying the patience of the House with one or two figures, because I think we ought to get this matter into perspective. The total consumption of all imported wines, is still less than it was before the war. In 1938–39 it was 15,220,000 gallons. In 1955–56 it was 12,670,000 gallons. The 1955–56 figure, however, is substantially above the 1950–51 figure.
Within these figures the consumption of light wines, including foreign and Commonwealth, has increased from just over 3 million gallons in 1938–39 to 5,400,000 gallons in 1955–56. In the same period the consumption of Commonwealth light wine has risen from 700,000 gallons to 1,020,000 gallons. It was only 670,000 gallons in 1950–51.
It is the heavy wines—this is the point—in which the consumption has decreased, both foreign and Commonwealth, but Commonwealth more than foreign. In 1938–39, 4,340,000 gallons of Commonwealth heavy wine paid duty, and in 1955–56 only 1,610,000 gallons. The fall in foreign heavy wine was from 7¼ million gallons to just over 5 million gallons


in the same period. There was a fall, but not as big as the Commonwealth wines. Today Commonwealth wines represent about one-quarter of the total of heavy wines consumed in the United Kingdom, compared with about one-third before the war.
Within this picture of heavy wine, different countries and different wines have had different fortunes. The consumption of South African heavy wine as a whole is at much the same level as before the war. Therefore, with the decrease of the total imports, South Africa's share of the United Kingdom market of heavy wines has risen from 11½ per cent. in 1938–39 to 18 per cent. in 1955–56.
As the hon. Gentleman said—and my information is the same—this has been accomplished by more sherry to balance the smaller exports from South Africa to our country of port type wine, including vermouth. Similarly, Spanish sherry has increased its share of the United Kingdom market, while Portuguese port has decreased its share. In the same way, the Australian port type wines have lost ground very heavily, and it is that which explains the massive drop in the Australian figures which the hon. Gentleman mentioned.
I cannot go fully into the reasons for this, but clearly a change in taste between sherry and the port type of heavy wine has played a large part, because port and sherry pay the same rates of duty; so duty cannot be the reason there. I think that is clearly a valid point. Whether there has been a change of taste from heavy wines towards light wines, I leave that to my hon. Friends to make up their minds.
As to the facts about the duties, I do not think I need add to what my hon. Friend has said.
The next point which I want to take is what the hon. Member said about Cyprus, which he mentioned as a special case. Total consumption in the United Kingdom of Cyprus wines, both light and heavy, compares well with pre-war. It was 321,000 gallons in 1955–56, as against 374.000 gallons in 1938–39, and only about 220,000 to 250,000 gallons in the years before 1938. It is true that, within that total, we are drinking substantially less of Cyprus heavy wines.
My hon. Friend referred to some steps that had been taken in Cyprus itself about the wine industry. My information is that the Cyprus Government assist the wine industry in various ways. These include the operation of the Vine Products Scheme, under which a subsidised price is paid for Zivania, and also the payment of a subsidy in respect of fresh grapes delivered to manufacturers. Some difficulty is being experienced in finding markets for Cyprus wine products; but it does not at the moment constitute a major danger to the industry. It arises partly from import restrictions, or duties imposed by importing countries, and partly from certain internal problems of the Cyprus industry. The Cyprus Government arranged for an independent investigation of the industry, which has recently been completed. The recommendations include the establishment in Cyprus of machinery for quality control and the appointment of an officer in London to concern himself with marketing. I thought that my hon. Friends would be interested in that.
The hon. Member for Wavertree mentioned the colonial waiver. I do not think I ought to go into that in detail because the colonial waiver, as the House will know, involves alteration of a duty, and, since an alteration can be made only by way of legislation, it is not in order for me to talk about it. I would, however, like to remind my hon. Friend of the difficulties and conditions that are attached to the colonial waiver. They do not make it less valuable. The colonial waiver was very valuable and was welcomed by the Government and by my hon. Friends; but there are certain conditions, and I would recommend my hon. Friends to examine those conditions. It is a fact that Cyprus is not in large measure dependent on the United Kingdom market, and any action that we take to help Cyprus would also have the effect of helping Commonwealth producers. That is important, in deciding whether or not we get the colonial waiver. I cannot say more. Perhaps my hon. Friend, if he is interested, would like to study the matter further.
The last point, which I know is one dear to the hearts of my hon. Friends, is the importance of Commonwealth trade. I was glad to hear that the


Liberal Party is now prepared so to trim its free trade policy that it will take account of the importance of Commonwealth trade. If I may say so, that is really quite an advance on the part of the hon. Member for Orkney and Shetland.

Mr. Grimond: Surely, Commonwealth trade has always been included in general trade; it is not a particular invention of this Government.

Mr. Low: Quite true, but in earlier days we did understand that the Liberal Party and my party were not in agreement about the importance which we, at any rate, attached to Commonwealth trade. But I understand that this afternoon we are all in agreement.

Mr. Grimond: So long as Whitehall is full of Liberals.

Mr. Low: Let there be no doubt that we attach great importance to the fostering of trade between this country and other Commonwealth countries. We are very conscious of the fact that it is in the interests of the sterling area as a whole, and the United Kingdom in particular, that trade should be at its highest between all Commonwealth countries. At this moment, we must all have in mind the difficulties which Australia has been encountering in her balance of payments, and we must all have in mind that anything which could be done to help Australia's trade and help her in her present economic difficulties might help her to relax the import restrictions which at present bear so hardly upon some United Kingdom industries.
We really must, however, keep this wine matter, if I may call it that, in its

proper perspective. It is wine which we are discussing this afternoon. Exports of wine from South Africa and Australia have never represented a major part of those countries' exports. In the case of Australia, they represented only 0·6 per cent. of total exports in 1938, and 0·1 per cent. in 1953. The comparable figures for South Africa were 0·4 per cent. and 0·3 per cent.
Moreover, in the case of Australia in particular, the great bulk of wine is produced for home consumption. Thus, in 1954–55 the total production of all types of wines in Australia amounted to slightly under 24 million gallons, whereas total exports were only about 1¼ million gallons, of which exports to the United Kingdom were 864,000 gallons.
Therefore, whilst I do not want to minimise the importance, particularly for Australia, of increasing exports of wines to the United Kingdom, and generally of the expansion of her exports to the United Kingdom, I think that such an expansion could, at the best, afford only limited relief to Australia's balance of payments, and could have only a limited effect upon the total of Commonwealth trade.

Major Legge-Bourke: As my right hon. Friend has touched on the subject of Australia's position, would he bear in mind that there are some of us who are very anxious that, if any alterations are to be made to assist Australia, especially as regards the Ottawa Agreements, all should be brought under consideration and not only the Australian ones?

Question put and agreed to.

Adjourned accordingly at twenty-one minutes to Four o'clock.